Yen falls to 24-year low, dollar bulls hold steady

The dollar took a breather on Tuesday after a sweeping rally but notched a fresh 24-year high against the rate-sensitive Japanese yen, as U.S. monetary policy tightening gathers pace and widens the gap with Japan’s stubbornly low-interest rates, Reuters reported.

The yen bottomed at 140.97, the lowest since 1998, and last traded 140.91 per dollar.

“After we saw the break of 140 … the momentum definitely was skewed for yen weakness,” said Galvin Chia, an emerging markets strategist at NatWest Markets.

“So long as (yield curve control) is in play, and so long as interest rate divergence is in place, one of those side effects would be a weaker yen.”

Elsewhere, the greenback eased slightly from milestone highs on the euro and sterling, although recession fears and a gas crisis kept caps on both currencies.

The euro was up 0.36% to $0.99605 after it hit a two-decade low of $0.9876 on Monday as the prospects for a winter without Russian gas sunk in.

Russia has halted gas flow along the Nord Stream 1 pipeline to Germany indefinitely, at first blaming an oil leak at a compressor station but on Monday linking the stoppage to sanctions imposed by the west.

Sterling was last up 0.54% at $1.1585, after sliding to a 2-1/2-year low of $1.1444 on Monday. Liz Truss is Britain’s new prime minister after winning a leadership vote on Monday and her promises of tax cuts add uncertainty to government finances.