Investing.com - The dollar pulled back from three-week highs against the yen on Tuesday, following remarks by an economic advisor to Japan’s government, while the euro was holding above five-week lows.
USD/JPY was last down 0.39% to 119.68, off the overnight highs of 120.25.
The yen gained ground after Etsuro Honda, an economic adviser to Prime Minister Shinzo Abe, said in an interview with The Wall Street Journal that the Bank of Japan should hold back from implementing additional monetary easing measures for some time to ensure the economy doesn’t “overheat.”
He added that current levels of the dollar against the yen may be at “an upper limit in the exchange rate’s comfort zone.”
The yen was also higher against the euro, with EUR/JPY sliding 0.22% to 134.07.
The euro was slightly higher against the dollar, with EUR/USD easing up 0.15% to 1.1199, holding above Monday’s five-week lows of 1.1159.
The euro found support after data on Tuesday showed that German retail sales jumped 2.9% in January, easily outstripping forecasts for a 0.4% increase.
The dollar had strengthened against the euro and the yen on Monday after data showing U.S. manufacturing activity continued to expand in February supported expectations for higher interest rates.
The euro’s gains were likely to remain limited as investors turned their attention to the upcoming European Central Bank meeting on Thursday, when it was expected to announce details of its quantitative easing program.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.23% to 95.30.