The dollar turned softer against the yen in early trade today due to a lack of follow-through buying after the US currency was pushed higher earlier today on rumours of intervention, dealers said.
But lingering fears over additional intervention are limiting the dollar's losses, they said.
After closing on three-week lows against the euro on Friday the single currency was slightly weaker this morning on $1.2080.
In addition, the market will pay close attention to the European Central Bank meeting on Thursday amid growing speculation of a rate cut in Europe, as well as the outcome of the US non-farm payroll data.
The Bank of Japan, acting on behalf of the Ministry of Finance, was speculated to have intervened in the foreign exchange market earlier today, after the dollar slipped to below the 105.50 yen level and reached 105.26.
"Judging from the [US dollar's] upturn after it slipped below the 105.50 yen level, it is apparent that Japanese authorities intervened," said Ryohei Muramatsu, manager of Group Treasury of Commerzbank.
The dollar's slide earlier in the day was prompted by a media report in Times Online that Japan's massive intervention campaign to weaken the yen and strengthen the dollar has officially come to an end.
AFP