The yen hovered just below a two-year peak against the euro early on Tuesday and was broadly firmer versus other major currencies as investors shed bearish positions overnight.
Analysts said the move was triggered by comments from Koichi Hamada, an economic adviser to Japan’s Prime Minister Shinzo Abe, which indicated that the yen was excessively weak against the dollar.
The dollar slid as far as 119.68 yen, having been as high as 120.845. It last stood at 120.06. The euro pulled back to a low of 126.505 yen, reaching levels not seen since June 2013. It has since drifted back to 126.98.