The yen hit fresh multi-year lows against the dollar and the euro on Tuesday, keeping investors on heightened intervention watch ahead of the Bank of Japan's meeting this week, while dovish policy maker chatter left sterling around its softest in months.
The euro, which climbed broadly after stronger than expected business activity data in France and Germany, reached 165.62 yen, its highest since 2008.
The dollar rose to 154.87 yen , its highest since 1990, edging ever closer to 155, a level considered by many participants as the new trigger for intervention by Japanese authorities.
Japanese Finance Minister Shunichi Suzuki said last week's meeting with his U.S. and South Korean counterparts has laid the groundwork for Tokyo to act against excessive yen moves, the strongest warning to date on the chance of intervention.
However, there are doubts about whether Tokyo will act so close to the BOJ's two-day policy meeting that starts on Thursday.
Japan's central bank is expected to project inflation will stay around its 2% target for the next three years in new forecasts due on Friday, signalling its readiness to cautiously raise interest rates again this year from current near-zero levels.
The euro gained against more than just the embattled yen, climbing 0.2% on the dollar to $1.06753 , having steadied after losses earlier in the month.
The common currency gained 0.16% on the pound to 86.39 pence, having briefly matched the previous day's four month high of 86.43 pence, after the German PMI data.
Comments from Bank of England policy makers that they see inflation slowing back towards the 2% target, and likely staying there, have seen investors become more confident that Bank of England rate cuts will come in the summer.
Earlier in the year, sterling took support from expectations that Bank of England would cut rates meaningfully later than the European Central Bank, which markets currently see moving in June.
The pound dropped to a five month low against the dollar of $1.2299 on Monday, though it was last a fraction higher at $1.2360.
Source: Reuters
