The yen fell in European trade on Wednesday against a basket of major rivals, sharpening the losses for the third straight session against the US dollar and hitting three-month lows amid concerns about a wider US-Japan gap in government treasury yields.

Recent bearish remarks from Japanese officials hurt the odds of a third BOJ interest rate hike this year, while the Federal Reserve is expected to only issue modest rate cuts in the short term.

The Price

The USD/JPY pair rose 0.7% today to 152.13 yen per dollar, the highest since July 31.

On Tuesday, the yen lost 0.2% against the dollar as US treasury yields continued to rise.

Japanese Rates

Recent remarks from Bank of Japan Governor Kazuo Ueda and the new Japanese PM Shigeru Ishiba were less aggressive than expected.

The remarks hurt the odds of another Japanese interest rate hike on October 31, or a similar hike in December.

US Yields

US 10-year treasury yields rose 0.5% on Wednesday on track for the third rise in a row, hitting a three-month high at 4.232% and bolstering the dollars standing.

The gains come after strong US data and bullish remarks from Fed officials last week.

Dallas Fed President Lorry Loan said shes confident of the economys stability and strength, but called for caution nonetheless and for gradual policy easing.

According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut in November fell from 92% to 87%, while the odds of maintaining rates unchanged stood at 13%.

A wider gap between US and Japanese long-term treasury yields would hurt demand on Japanese bonds and undermine the yens standing.