The pair climbs toward 160.70 amid speculation the Bank of Japan may delay tightening due to economic uncertainty.
The USD/JPY pair rose to 159.73 in early European trading Tuesday, extending gains as the Japanese Yen weakened. Investors question whether the Bank of Japan will raise interest rates soon, given economic concerns linked to the Middle East crisis and domestic growth risks.
The Yen underperformed against major currencies, with the heat map showing its largest decline against the Canadian Dollar. Former BoJ Deputy Governor Masazumi Wakatabe noted last week that policymakers must assess if the economy can handle tighter monetary conditions, per reports.
Market focus remains on potential Japanese intervention as USD/JPY approaches 160.70, a level tied to past forex moves. Officials have avoided specifying intervention thresholds, keeping traders cautious.