Yen gained ground in Asian trade on Tuesday against a basket of major rivals, extending gains for the second straight session against the US dollar and moving away from three-week lows.

Yens movements come as Japans 10-year treasury yields rallied, while US 10-year yields fell, in turn reducing concerns about the widening yield gap.

Japans finance minister recently issued warnings around the yens weakness, which could have a negative economic impact.

The Price

The USD/JPY fell 0.1% to 156.69 yen, with a session-high at 156.95.

The yen rallied 0.1% against the dollar yesterday, the first profit in four days away from three-week lows at 157.20.

The recovery is buoyed by Bank of Japan Governor Kazuo Ueda recent remarks on achieving neutral interest rates.

Japans Yields

Japans 10-year government yields rose 1% today to a 12-year high at 1.034%, boosting yen.

The developments came amid expectations the BOJ will soon take a decision to reduce its government bonds purchases on the way to normalize policies.

US Yields

US 10-year treasury yields fell by 0.25% on track for the second straight loss, pressuring the greenback.

Markets await a batch of crucial US data and speeches by Fed officials later today to gauge the likely path ahead for policies.

The Yield Gap

The 10-year government yield gap between the US and Japan shrank to 340 basis points, the lowest since 2020, underpinning yens standing against the dollar.

Japans Finance Minister

The Japanese finance minister Shunichi Suzuki recently expressed concerns about the ongoing weakness of the yen, reiterating the governments warnings towards the issue.

He said in front of Parliament that a weaker yen underpins exporters but increases burdens on corporations and consumers as it drives import prices much higher.