The Japanese Yen edged lower on Tuesday but retained most of the gains generated by last week's intervention, as coordinated action by Tokyo and Washington to support the currency continued to discourage traders from rebuilding bearish positions.
The currency was 0.4% weaker at 157.8 per Dollar at the time of writing, surrendering part of the previous session's rally after reaching a three-month high of 155.20. Even so, it remained well above the 40-year low of 163.99 recorded in July.
The Yen had climbed as much as 5% over the previous three trading sessions, with Japan confirming on Friday that it had conducted a rare joint Yen-buying intervention with the United States.
Two market sources told Reuters news agency that the US Treasury purchased Yen using Euros last week rather than selling Dollars, an unusual approach that was likely intended to help Japan strengthen its currency without fuelling speculation that Washington favours a weaker US Dollar.
Against the Euro, the Yen weakened 0.5% to 181.62 after reaching an almost nine-month high of 179.44 in the previous session.
Monday's sharp rally in the Yen fuelled speculation that Japanese authorities may have stepped into the market once again, although officials neither confirmed nor denied any intervention.
Strategists also pointed to the 155 Yen-per-Dollar level as a key threshold, noting that the currency pair found support around that mark during Japan's intervention campaigns in April and May, making it an important level for traders to watch.
The US Dollar remained under pressure after weakening in the wake of the coordinated Yen-buying intervention, while lower oil prices also weighed on the currency.
President Donald Trump said on Monday that talks with Iran were underway, describing them as a “last chance” for Tehran to reach an agreement to end the five-month conflict. However, Iran denied that any negotiations were taking place or were planned.
The Euro was little changed at $1.151 after reaching a six-week high of $1.156 in the previous session, while Sterling traded at $1.343. Meanwhile, the Dollar index recovered slightly to 100 after falling to a six-week low.