The Japanese yen rose in Asian trade on Tuesday against a basket of major rivals, while trying to recover from three-month lows against the dollar, on active short-covering after recent losses, while Japans finance minister vowed to monitor forex movements.

The gains are also boosted by a stall in US 10-year treasury yields, as investors shun risks ahead of crucial US data later this week.

The Price

The USD/JPY fell 0.3% today to 152.85 yen per dollar, with a session-high at 153.36.

The yen lost 0.7% yesterday against the dollar, hitting three-month lows at 153.88.

As the Japanese governing coalition lost its majority in the Diet, it sparked a state of uncertainty in the markets.

Japan is facing a period of political maneuvering in order to form a new coalition, after the LDP party and its partners won 215 seats in the Diet, below the 233-seat majority.

Japans finance minister Katsunobo Kato said on Tuesday that authorities will be cautious when dealing with forex movements, including trades made by speculators.

He asserted that authorities are keeping a close eye, in what could be a hint at intervention once more if the yen went out of control.

The yen tumbled sharply once again amid the political chaos in Japan, which might hamper efforts to tighten monetary policies in upcoming months.

Kato added that the government will organize a new economic package to prop up the economy and support the fundamentals.

US Yields

US 10-year treasury yields fell 0.5% on Tuesday away from three-month highs at 4.300%, on track for the first loss in three sessions amid active profit-taking.

The developments came ahead of important US housing prices, consumer confidence, and job opportunities data later today.

The data will showcase the flexibility of the US economy and will likely change upcoming odds of US interest rate decisions in November and December.

According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut stood at 97% in November.

A smaller long-term yield gap between Japan and the US would serve to boost the appeal of Japanese bonds and underpin the yen eventually.