Investing.com - The dollar turned lower against the yen on Wednesday, as investors cashed out profits following its rise to two-week highs after Japan warned that it is prepared to intervene in the foreign exchange market.
USD/JPY was down 0.51% to 108.72, moving off Tuesday’s highs of 109.36.
The dollar strengthened against the yen in the previous two sessions after Japanese Finance Minister Taro Aso said Monday that financial authorities are prepared to intervene in the currency market if excessive moves in the yen are enough to affect the country’s economy.
But many investors expect that Japan will refrain from taking step to weaken the yen ahead of a G7 meeting its is hosting later this month, in the absence of support for such a move.
Late last month the U.S. Treasury Department added Japan to a watch list of countries it is monitoring to gauge whether their foreign exchange policies provide an unfair trade advantage.
The Treasury noted that the current dollar-yen market was "orderly" and reiterated all countries must abide by G20 and G7 commitments on exchange rate policies, widely seen as a call for Japan to limit foreign exchange interventions.
Aso said Monday the Treasury’s move to put Japan on a watch list “won’t constrain” Tokyo’s currency policy.
The yen had hit 18-month highs against the dollar last week after the Bank of Japan held off from expanding monetary stimulus.
The euro was also lower against the yen, with EUR/JPY down 0.41% at 123.76, pulling away from Tuesday’s one-and-a-half week peaks of 124.43.
The euro pushed higher against the dollar, with EUR/USD rising 0.17% to 1.1390.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slid 0.17% to 94.06.