The Japanese yen was the weakest major currency against the broadly softer US dollar on Monday as investors waited for any sign of official buying from Tokyo to slow the currencys slide.

A national holiday in Japan reduced liquidity during the Asian session, keeping the yen down 0.3% at 156.89 per dollar and close to the ten-month low it hit last week.

The yen continues to face pressure from a combination of highly accommodative fiscal policy and some of the lowest interest rates in the world. It found brief support on Friday after rebounding from ten-month lows, following stronger verbal warnings from Finance Minister Satsuki Katayama.

Traders see a risk of official intervention somewhere between 158 and 162 per dollar, with the thin liquidity expected during the US Thanksgiving holiday later this week viewed as a potential window for action.

Nick Rees, head of macroeconomic research at Monex Europe, said: The yen is currently caught between two forces: short-term rates are rising as the Bank of Japan continues tightening, while the long end of the yield curve is being pushed higher by broader financial-risk concerns.

Rees added that markets are focusing more on Japans long-term structural risks rather than the short-term implications for the currency.

Takouji Aida, a private-sector member of a key government committee, told NHK on Sunday that Japan is capable of intervening actively in FX markets to mitigate the economic damage from a weak yen.

Rees noted that any intervention might slow USD/JPYs climb but is unlikely to reverse it entirely, given that the fundamental forces behind the trend remain intact.

Euro rises as sterling holds steady ahead of UK budget

Elsewhere in FX markets, the euro rose 0.2% to 1.1531 dollars as traders renewed bets on a December Fed rate cut following comments from New York Fed President John Williams, who said there is room for further easing in the near term.

The euro showed little initial reaction to the updated peace-framework discussions between Kyiv and Washington, which build on and modify last weeks 28-point proposal.

The dollar index was steady at 100.15, with most major currencies hovering near recent lows.

Sterling was little changed at 1.3095 dollars ahead of Wednesdays UK budget, where Finance Minister Rachel Reeves is expected to balance support for a slowing economy with demonstrating fiscal discipline.

The New Zealand dollar held at 0.5608 dollars after an 8% slide since July due to weakening economic prospects. Markets are almost fully pricing a 25-basis-point RBNZ rate cut on Wednesday, while expectations for another cut next year remain uncertain.

The Australian dollar traded at 0.6457 dollars as investors awaited Wednesdays CPI release the first full monthly inflation report. A Reuters poll showed core inflation likely holding at 3.6%.

Peter Dragicevich, APAC currency strategist at payments company Corpay, said: A result like this, in our view, would reinforce the idea that the Reserve Bank of Australia may not cut rates again in this cycle.