The yen weakened against the dollar and euro on Tuesday, reaching multi-year lows. This has investors watching for potential intervention from the Bank of Japan ahead of its policy meeting this week.
The euro reached its highest level since 2008 against the yen, at 165.71, after data showed business activity in the eurozone expanding at its fastest pace in nearly a year. The dollar rose to 154.88 against the yen, its highest level in 34 years.
Analysts believe that the 155 level for dollar/yen is a key psychological figure, and that intervention from Japanese officials is possible if the yen weakens further. However, there are doubts about whether Tokyo would act so close to the BOJ's policy meeting.
The BOJ is expected to forecast that inflation will stay around its 2% target for the next three years, signaling its readiness to cautiously raise interest rates again this year.
The dollar weakened against the yen after data showed U.S. business activity easing in April. The euro climbed to a two-week peak against the dollar, before drifting back.
The pound weakened against the euro and dollar after dovish comments from the Bank of England. Investors expect the Federal Reserve to be one of the last major central banks to cut interest rates.