The yen stumbled against the US dollar on Tuesday after Bank of Japan (BOJ) Governor Haruhiko Kuroda announced a likely further softening on policy, while the euro’s gains were kept in check as focus returns to economic issues in the eurozone.
The greenback advanced 0.1 percent to 110.81 against the safe-haven currency, recovering from a low of 110.45 registered earlier in the session.
The yen climbed sharply at the end of 2018 as the fall in risk appetite prompted traders to wind down carry trades funded in the Japanese currency. The yen had largely spent this year shedding those gains until turning up last week’s unexpectedly disappointing US economic data.
Against a basket of six major currencies, the dollar index slightly dropped 0.02 percent to $96.718, after ending the previous session unchanged. US financial markets were closed on Monday for the Presidents’ Day holiday.
The mild lift on the greenback came after Kuroda stated that the BOJ was prepared to raise stimulus if sharp yen increases weigh down the economy and derail the course towards reaching its 2 percent inflation target.
Kuroda’s comments came at a time when several central banks, including the Federal Reserve, have become dovish in the face of growing global economic risks.