TOKYO (AFX-ASIA) - The dollar was weaker against the yen in midafternoon trade, having reversed previous gains after Finance Ministry director-general Zenbei Mizoguchi reportedly said he shares the same view towards the yen as Bank of Japan governor Masauru Hayami, who yesterday said a weaker yen would not solve Japan's economic problems, dealers said. The dollar had earlier apppreciated to above 133.50 yen, bid higher as a result of the fall in the Nikkei 225 index to below the psychologically important 10,000 points level and political concerns after Prime Minister Junichiro Koizumi dismissed foreign affairs minister Makiko Tanaka. Sumitomo Trust and Banking Co Ltd customer dealer Jitsuo Tachibana said the dollar appreciation halted after the reported comments by the senior MOF official. "Following the comments, everybody, who built long positions on anticipation for a test of the upside today, rushed to unload such positions," Tachibana said. Dealers said that stop-loss dollar selling orders then activated, pushing the US currency further lower, and a test of support at 132 yen may arise. But Bank of Tokyo Mitsubishi foreign exchange analyst Osamu Takashima said the underlying bull trend of the dollar will remain intact, citing a huge gap in the economic fundamentals between the US and Japan. "The dollar can resume its upward move at any time and re-test the 135 yen level," Takashima said, adding that on the downside, investors appear willing to support the dollar at around 133 yen levels. Dealers said activity slowed in the afternoon session, with market participants cautious ahead of the US FOMC decision on interest rates tonight. "This time, participants are focusing more on the statement due from the FOMC than its decision on monetary policy management," Takashima said. "If the US Fed implies, even very vaguely, the possibility of a shift to a neutral policy bias at its March or May FOMC meetings, it will further enhance sentiment towards the dollar." "However, the Fed may indicate that due to the risk of capital outflows from the equity market on concerns over corporate accounting after the Enron case, it will remain ... flexible on policy, depending on the risks," he added. The euro was firmer against the dollar thanks to the US currency's downturn against the yen and concerns over the outlook for US capital markets, dealers said. But, Sumitomo Trust's Tachibana said the euro will maintain its downtrend, citing emerging hopes for an economic recovery in the US. He added that the European currency may test the 0.85 usd level.