The yen stood tall on Tuesday after tensions on the Korean peninsula flared-up anew amid an escalating war of words between North Korea and the United States, while the euro struggled near a four-week low versus the dollar.
The dollar was 0.15 percent lower at 111.550 yen <jpy=>after coming off a high of 112.530 the previous day.</jpy=>
The euro was steady at 132.340 yen after dropping more than 1 percent overnight.
The Japanese currency made sharp gains after North Korea's foreign minister Ri Yong Ho said on Monday that President Donald Trump had declared war on the country and that Pyongyang reserved the right to take countermeasures.
The dollar tends to fall on flare ups in North Korean-related matters, but whether the Federal Reserve can hike interest rates in December as they projected still remains the ultimate decider. Immediate focus was on what views could be expressed by Fed Chair Janet Yellen, who is due to speak in Cleveland at 19:45.
The common currency took a knock after German Chancellor Angela Merkel won her country's elections over the weekend but saw a chunk of support shift to the far right.
At the same time the 10-year German bund yield <de10yt=tweb>hit a two-month low as the debt markets interpreted the ECB's message differently, seeing the central bank taking a cautious and patient approach to tapering its stimulus.
Source: Bloomberg Pro Terminal
Junior Trader Stefan Panteleev
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