The Dollar reached a 10-week high on Tuesday and a six-month high against the Yen.

A top currency diplomat in Japan said on Tuesday that currency market moves will be closely monitored, and Japan will respond "appropriately" as needed, following a meeting with financial authorities as the Yen fell to a six-month low against the Dollar.

The Yen made gains on news of the meeting, and at the time of writing, the greenback was 0.2% lower at 140.16 Yen, after previously rising to 140.93, a high not seen since November last year, Reuters reports.

MUFG's head of research, global markets EMEA, Derek Halpenny, said all eyes were on the Yen ahead of a possible election as Japan is a key importer of energy, and petrol subsidies are coming to an end.

"Maybe it's the start of some potential increasing concerns (about the currency). Obviously, we've had the debt ceiling agreement, and Tokyo is maybe looking at the markets, seeing a reasonable chance the Fed hikes in June, and it's feasible we get Dollar/ Yen in the mid 140s.

"If (Prime Minster) Kishida is looking at a snap election, he wants to be seen to be addressing one source of energy inflation, which would be currency depreciation," he added.

In addition, the Dollar index was given a boost by US President Biden and Republican House Speaker Kevin McCarthy reaching an agreement to suspend the debt ceiling. The index reached 104.53 on Tuesday, a 10-week high, though then edged down to 104.02, the Reuters report adds.

"It seems to be win-win on almost any scenario for the Dollar right now," according to the head of FX strategy at Rabobank, Jane Foley.

"Last week, the Dollar was gaining on safe-haven demand in case the US defaults; this week, you can say the Dollar is gaining because the US isn't going to default. It tells you there is demand for the US Dollar."

In addition, at the time of writing, the Euro gained 0.28% to $1.0733 after previously falling to a two-month low, whilst the Sterling rose 0.5% to $1.2426.