US dollar, Euro, Yen and Pound banknotes are seen in this illustration created on May 4, 2025. (Reuters/Dado Ruvic)
The Japanese yen climbed to fresh seven-month highs against the US dollar on Tuesday, as traders continued to unwind short positions amid growing bets of a Bank of Japan interest-rate hike while the dollar was subdued ahead of CPI data this week.The yen strengthened to as much as 153.53 per dollar in morning trading, surpassing levels reached during Japan's July intervention and hitting its strongest since February.
That added to the yen's 1.2 percent jump during a thin session on Monday amid a US holiday, with the Japanese currency now having firmed nearly 4 percent from around 160 yen per dollar early last week.
Traders and analysts said a slew of factors, including bets on a faster pace of Bank of Japan tightening, and the potential for Japanese investors to repatriate their funds, unwinding carry trades and US political pressure are now driving a sea-change for the embattled currency and turning away the bears.
"The drop looked more like a sharp unwind of yen shorts after the pair broke below critical supports" from the around 155 levels seen in August and May, said Tony Sycamore, market analyst at IG, adding that it could open the way for a test of the next layer of support.
