The US dollar rose against the yen in late afternoon trade here, aided by cross yen selling and comments by Bank of Japan policy board member Shin Nakahara, dealers said.
After an early dip, the dollar came back stronger in the afternoon, rising past its overnight highs in New York as the yen came under selling pressure via cross currency plays.
Comments by Nakahara, one of the nine policy board members at the Bank of Japan, also partly contributed to the yen selling.
He noted that caution was still needed on the inflation front with some risks remaining that consumer prices in Japan may fall again. He added that the BOJ should have spent more time in determining a rising trend in consumer prices before lifting its quantitative easing policy.
A Japanese trust bank led the way in buying dollar-yen and euro-yen with the former triggering stop-loss buying above 117.10 yen, which then drove it to a 117.27 peak, dealers said.
Despite the dollar's gains today, near-term risks are still skewed slightly to the downside as yen demand is expected to pick up in the days leading up to the Japanese fiscal year-end this month although strong support is still seen at 115.50 yen.
The euro-yen had fallen to morning low of 140.75 before the recovery began and the cross then shot up past 141.00 to a 141.42 high in the afternoon.
The early cross dip also set the tone for the euro-dollar to trade heavily through much of the Asian session, as stop-loss sell orders were fired off below yesterday's New York low of 1.2068 usd. While the euro-dollar managed to crawl back up in late dealings, the gains have been limited.
"It should be a buy down here but it's possible the market will go for more euro-dollar stops through 1.2040-50 usd first," UBS currency dealers said.
DBS Bank analysts said they believe the medium-term risk for euro-dollar is on the upside given that the European Central Bank is just beginning to lift interest rates while the US Federal Reserve is close to the end of its rate hike cycle.
Over in the US, there are some fairly important data releases due today and tomorrow, including weekly jobless claims and February existing home sales data tonight.