Investing.com - The dollar rose to fresh seven-year highs against the yen on Tuesday as strong gains in Asian equities markets overnight dampened demand for the traditional safe haven yen.
USD/JPY hit highs of 115.86, the most since October 2007 and was last up 0.81% to 115.76.
Speculation that Japan’s government may postpone a planned sales tax increase boosted risk appetite and fuelled strong gains in Asian equities overnight, curbing investor demand for the Japanese currency.
Demand for the dollar was also underpinned by expectations that the recovery in the U.S. will outpace other major economies.
The dollar slid in the previous two sessions after Friday’s softer than expected U.S. jobs report prompted a bout of profit taking to lock in gains after the greenbacks recent run higher.
The dollar has rallied over the past two months as broadly stronger economic data fuelled expectations that the Federal Reserve will raise interest rates sometime in 2015.
In contrast, central banks in Japan and the euro zone are likely to stick to a looser monetary policy stance in a bid to spur growth and inflation.
The US dollar index, which tracks the performance of the greenback against a basket of six major currencies, was up 0.20% to 88.04, not far from Friday’s four-and-a-half year peaks of 88.31.
The euro edged lower against the dollar, with EUR/USD dipping 0.04% to 1.2413, holding above last Friday’s 26-month trough of 1.2356.
Elsewhere, the euro was higher against the softer yen, with EUR/JPY rising 0.75% to 143.66, nearing last Thursday’s 11-month highs of 144.20.