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The dollar rose to its highest level in two weeks, supported by rising US bond yields, which pushed the Japanese yen to its lowest level in more than 20 years against the dollar.
The yen fell to 133 yen against the dollar, a level previously highlighted as a trigger for intervention, a day after Bank of Japan Governor Haruhiko Kuroda reiterated his full commitment to “strong” monetary stimulus.
The yen is sensitive to the interest rate differentials between Japanese and US bonds.
The dollar index, which measures its value against six major currencies, including the yen, rose by as much as 0.39 percent, extending its rise on Monday, which reached 0.26 percent and reached its highest level since May 23.
The euro fell 0.12 percent to $ 1.06825 before the European Central Bank’s policy-setting meeting on Thursday, as it is expected to announce an end to bond purchases, paving the way for an interest rate hike for the first time in 11 years at the July meeting.
The pound fell to its lowest level in nearly three weeks, recording $1.2433, as the state of political tension experienced by Prime Minister Boris Johnson worried investors.
Johnson won a confidence vote late Monday by 211 to 148, enough to avoid having to resign immediately, but a larger-than-expected rebellion within his party leaves him in political agony as he struggles to regain the trust of his colleagues and the public.
The Chinese yuan retreated from its highest level in a month against the dollar, affected by the rise of the US currency on a large scale, while some investors awaited the pace of economic recovery after Shanghai lifted the closure measures to contain Covid-19.
In terms of cryptocurrencies, Bitcoin fell 5.8 percent to $29,527, erasing its 4.89 percent gain on Monday.
