Investing.com - The dollar was trading close to more than three-month lows against the yen on Tuesday, while the Australian dollar fell to two-week lows following remarks from the assistant governor of the Reserve Bank and dovish central bank minutes.
USD/JPY was last down 0.12% to 101.36, not far from Monday’s low of 101.09, the weakest level since February 5.
Investors remained cautious ahead of the minutes from the Federal Reserve’s latest monetary policy meeting on Wednesday, as they awaited insight on the central bank's view of the economy.
Recent U.S. economic reports indicating that the recovery remains uneven have weighed on U.S. Treasury yields, pressuring the dollar lower.
Demand for the yen continued to be supported by expectations that the Bank of Japan will refrain from further stimulus measures in the near term.
The BoJ was widely expected to keep monetary policy unchanged at the conclusion of its two-day meeting on Wednesday, after recent comments by Governor Haruhiko Kuroda indicated that the bank’s assessment of the economy remains upbeat.
The euro was also trading at more than three month lows against the yen on Tuesday, with EUR/JPY down 0.19% to 138.87, near the lows of 138.60 struck in the previous session, the weakest since February 7.
The shared currency was little changed against the dollar, with EUR/USD steady at 1.3702, not far from the two-and-a-half month lows of 1.3647 reached late last week.
The euro remained under pressure from mounting expectations for monetary easing by the European Central Bank at its next meeting in June and data last week showing that the euro zone economy grew at a slower than forecast rate in the first quarter.
The pound was slightly higher, with GBP/USD up 0.10% to 1.6828. The pair rose to session highs earlier after official data showed that the annual rate of consumer inflation in the U.K. rose by1.8% in April, up from 1.6% in March and ahead of expectations for 1.7%.
Sterling gave back some gains after the data also showed that consumer prices are rising faster than wages.
The dollar was almost unchanged against the Swiss franc, with USD/CHF dipping 0.05% to 0.8916.
Elsewhere, the Australian dollar fell to its lowest level in two weeks, with AUD/USD dropping 0.80% to 0.9256 after Reserve Bank assistant governor Guy Debelle said Tuesday the local currency was likely to decline given an overall drop in foreign capital flows into Australian assets.
Sentiment on the Aussie was also hit after the minutes of the Reserve Bank’s May meeting noted that "overall growth in coming quarters was likely to be below trend” due to slowing exports and a decline in mining investment.
NZD/USD was down 0.61% to trade at 0.8574, while USD/CAD eased up 0.16% to 1.0889.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was almost unchanged at 80.08.