Investing.com - The dollar slid lower against the firmer yen on Tuesday as falling oil prices fuelled risk aversion, underpinning demand for the traditional safe-haven yen.
USD/JPY was down 0.56% to 120.03, off the seven year peaks of 121.81 struck on Monday.
Oil prices continued to tumble on Tuesday, following falls of more than 4% on Monday as expectations that a growing supply glut would continue to weigh on prices into the new year.
The yen also gained ground against the euro, with EUR/JPY down 0.51% to 147.89.
The dollar continued to remain supported by the diverging monetary policy stance between the Federal Reserve and central banks in Japan and Europe.
Last week’s strong U.S. jobs report for November prompted investors to bring forward expectations for the first hike in interest rates to mid-2015 from September 2015 ahead of the report.
Earlier Tuesday, the Wall Street Journal reported that Fed officials are looking at dropping an assurance that interest rates will stay low for a "considerable time", in its statement, following its upcoming policy meeting next week.
Elsewhere, the euro pushed higher against the dollar, with EUR/USD easing up 0.14% to 1.2331, not far from Monday’s two year trough of 1.2246.
The U.S. dollar index, which measures the greenback against a basket of six major currencies, was down 0.23% to 88.98. On Monday the index rose to a five year high of 89.53.