(Updates prices at 0615 GMT)
The dollar flirted with the psychological threshold of 150 yen on Tuesday and held broadly steady ahead of a key reading on U.S. inflation due later in the day, while bitcoin surged to a more than two-year high.
Trading was largely subdued in Asia with markets in China and Hong Kong still closed for the Lunar New Year holidays and traders on guard ahead of Tuesday's release of consumer prices data in the world's largest economy.
The greenback rose to an over two-month high of 149.58 yen JPY=EBS , edging toward the closely-watched 150 level that analysts said would likely trigger further jawboning from Japanese officials in an attempt to support the currency.
The yen, which has already tumbled more than 5% against the dollar year-to-date, is under persistent pressure as investors pare back their expectations of the scale and pace of the Federal Reserve's easing cycle.
Yen bears are also being emboldened by signs the Bank of Japan will resist aggressively hiking rates even if it exits negative interest rates this year as markets are wagering.
"It is a bit of a yield story. Yields in the U.S. are around their highs for 2024, so that's certainly helped dollar/yen," said Tony Sycamore, a market analyst at IG.
"It's also being supported by carry. With volatility so low and... for 2024, the markets have been pretty happy to add risk to their portfolios, and the carry trade is certainly part of that, which supports dollar/yen because of the yield differential."
Elsewhere, the New Zealand dollar NZD=D3 fell 0.38% to $0.6105, after a Reserve Bank of New Zealand survey showed on Tuesday the country's inflation expectations fell to more than two-year lows in the first quarter.
The euro EUR=EBS edged 0.04% lower to $1.0767, while sterling GBP=D3 fell 0.1% to $1.26165.
A recent run of resilient economic data out in the United States, particularly a blowout jobs report out this month, have heightened expectations that U.S. rates are likely to stay higher for longer.
Markets are now pricing in just about 110 basis points of rate cuts from the Fed this year beginning in May, down from about 160 bps at the end of last year. FEDWATCH
The Federal Reserve Bank of New York said in its January Survey of Consumer Expectations on Monday that inflation forecasts for a year and five years from now were unchanged at readings of 3% and 2.5%, respectively.
The projected rise in inflation three years from now dropped to 2.4%, the lowest since March 2020, from December's 2.6%.
"Obviously, the U.S. dollar has really benefited from the resilient data we've seen recently, and we've sort of seen that the U.S. economic outperformance story is really what's driving currency markets overall," said Kyle Rodda, senior financial market analyst at Capital.com.
"You're not really seeing that same level of strength in Europe and anywhere in Asia... and that's definitely showing the appeal for the greenback."
Against a basket of currencies, the dollar inched up 0.04% to 104.19 =USD . The Australian dollar NZD=D3 eased 0.18% to $0.65195.
In cryptocurrencies, bitcoin BTC= touched its highest since December 2021 at $50,383 and steadied above $50,000 for a second day running.
The world's largest cryptocurrency has risen nearly 18% this year, helped by last month's regulatory nod for U.S.-listed exchange traded funds (ETFs) designed to track its price.
Analysts said the latest boost to bitcoin comes ahead of its halving event, which will cut the reward for successfully mining a bitcoin block in half.
"It's a really interesting move. The expectation of rate cuts certainly helps, but it doesn't explain what's really set fire to bitcoin over the past four, five sessions," said IG's Sycamore.
"In that respect, I think it's more a focus on the halving... and some ETFs inflows."
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