* Yen extends last week's rally

* Japan spent as much as $36.58 billion on latest FX

intervention

* Dollar index set to snap four straight sessions of losses

(Updates headline and first paragraph, adds analyst comment)

By Chibuike Oguh

NEW YORK Aug 3 (Reuters) - The yen strengthened against the

dollar and euro on Monday as investors watched for signs of

further intervention after Tokyo and Washington stepped into the

foreign exchange markets last week to support Japan's currency.

Japan and the U.S. conducted coordinated yen-buying intervention

and will not hesitate to take further action, Japan's Finance

Ministry said on Monday.

The Japanese currency was last up 0.18% at 157.05 per

dollar, remaining at its strongest level in about three months.

"It became clear by Friday that there was an intent, and

more, of an announcement of the U.S. actually working together

with the Japanese to intervene in the FX," said Juan Perez,

director of trading at Monex USA.

"The main thing is trying to understand how likely this is

going to happen again because these operations are also

expensive."

Japan may have spent as much as $36.58 billion to ​buy yen in

the latest action aimed at strengthening the ‌currency, central

bank data indicated on Monday. That brings the total amount

spent on its two FX interventions this year to more than $100

billion.

The yen also advanced against other currencies such as the

euro and sterling, stirring speculation that Japanese

authorities could be in the market again.

"I've mentioned it many times that the next step is for the

U.S. Treasury to get involved and Scott Bessent actually hinted

at it some time ago that they would be supportive of Japan,"

said Eugene Esptein, head of structured products for Moneycorp

North America.

"They've finally gotten involved. But will they do it again?

The Bank of Japan spends substantially more doing this as they

should. But the risk here is that treasuries are being sold to

fund these transactions and I don't know what part of the curve

they're selling. They just have to be careful of the mechanics

of this because they could just push bond yields higher."

Against the euro, the yen rose 0.45% to 180.78,

after earlier touching 179.435, its strongest level since

mid-November 2025.

The yen has been under pressure for years, undermined by the

Bank of Japan's gradual approach to monetary policy tightening,

which has kept yield differentials wide between Japan and the

rest of the world.

Bank of America analyst Shusuke Yamada said the coordinated

action by Japan and the United States could challenge the market

view that foreign exchange intervention has little long-term

effect.

"The view that FX intervention cannot have a lasting impact

and merely alters short-term market flows seems right in many

cases. However, depending on the circumstances and broader

context, intervention can exert a significant influence on the

market, and trigger an inflection," Yamada said in an investor

note.

DOLLAR INDEX PARES LOSSES

The dollar index, which measures the U.S. currency against a

basket of major peers, edged higher as it recouped some losses

after recent yen gains that followed the intervention.

The index was up 0.25% at 99.97, on track to snap

four straight sessions of losses.

The euro was down 0.11% against the dollar at $1.15085,

after hitting a fresh 1-1/2-month high at $1.1559.

An easing of geopolitical tensions typically weighs on the

dollar while supporting the euro and yen, as safe-haven demand

fades and concerns over energy-exposed economies recede.

The Federal Reserve Bank of New York sold euros for yen on

behalf of the Treasury through two banks, the Financial Times

reported.

Analysts also said the U.S. Treasury's reported decision to

intervene through the euro was to avoid signalling a desire for

broad-based dollar weakness.

The euro strengthened 0.18% against the Swiss

franc to 0.9326. Sterling weakened 0.39% to $1.3429.