The US dollar declined against most major currencies on Wednesday after signals from the United States indicated that an agreement with Iran is approaching, while the Japanese yen jumped to its highest level in more than two months amid expectations of new official intervention from Tokyo to support the currency.

The yen rose by as much as 1.8% in a rapid move, pushing the dollar down to around 155 yen, its lowest level since February 24. The dollar had earlier recorded broad gains against several currencies before suddenly retreating against the yen, sparking speculation about renewed intervention in the foreign exchange market.

Japanese Finance Minister Satsuki Katayama had warned earlier this week about speculative movements in currency markets after a sudden rise in the yen raised suspicions of government intervention to support it.

Katayama told reporters following the Asian Development Banks annual meeting in Uzbekistan: As I have repeatedly stated, we will take decisive action against speculative movements, in line with the statement signed between Japan and the United States last year.

No immediate comment was available from Japans Ministry of Finance due to a local holiday.

Analysts believe that part of the difficulty in halting the yens decline is due to factors beyond Japans control, such as rising US Treasury yields and oil prices, which support dollar strength.

In this context, Jeremy Stretch, head of G10 FX strategy at CIBC Capital Markets, said that weakening the dollar against the yen remains difficult while oil prices stay elevated and US 10-year Treasury yields remain near 4.4%.

He added: It is extremely difficult to push the yen higher if oil prices remain elevated or US Treasury yields stay high. Nevertheless, the dollar falling toward 156.5 under these conditions is considered a relative success.

Most other major currencies also posted gains, benefiting from dollar weakness, after US President Donald Trump announced a temporary suspension of the ship escort operation through the Strait of Hormuz, pointing to progress toward a comprehensive agreement with Iran.

This came after remarks by US Secretary of State Marco Rubio, who confirmed that the United States had achieved its objectives in the military campaign against Iran.

Meanwhile, oil prices declined on Wednesday, with Brent crude falling by more than 2.5% to around $106 per barrel.

The euro rose by 0.4% to $1.1735, while the British pound gained by the same percentage to $1.3598.

The Australian dollar recorded its highest level in nearly four years, rising by 0.8% to $0.724, after the Reserve Bank of Australia raised interest rates for the third time this year.

Markets are now awaiting the release of US nonfarm payrolls data later this week, which will test the strength of the US economy and whether that will push the Federal Reserve to keep interest rates unchanged, or whether slowing labor market conditions could strengthen the chances of rate cuts.