Yen Under Pressure from Hawkish Turn by Global Central Banks

The Japanese yen is under pressure from a strong dollar as traders anticipate that global central banks will continue to hike interest rates, leaving Japan's rates at a significant gap with its peers.

A recent Bank of Japan rate hike came with two dovish dissents, contrasting with the Federal Reserve's rate increase last week and other global central banks sounding hawkish.

Unless the BOJ tightens policy more rapidly than the Federal Reserve, the approximately 275-basis-point US-Japan rate differential is expected to support yen-funded carry trades.

The dollar-yen exchange rate rose to 157.33 on Tuesday, while other currency pairs were mostly steady, with the euro at $1.1467 and the Aussie dollar hovering at $0.7120.