Investing.com– Most Asian currencies fell slightly on Tuesday as the dollar recovered recent losses ahead of a series of interest rate signals, while the Japanese yen weakened further to a level last seen 38 years ago.

Regional currencies gained little support even as investors priced in an increased likelihood of a September rate cut by the Federal Reserve. Waiting for more guidance from the Federal Reserve and the U.S. labor market has curbed appetite for risk assets.

Japanese Yen Weakens, USDJPY Rising, With Intervention in Focus

The Japanese yen continued to lag behind its Asian counterparts, with the pair, which measures the number of yen needed to buy one dollar, rising 0.1% to 161.64 yen. The pair was hovering near its highest level since 1986.

The yen’s continued weakness has sparked further speculation about potential government intervention in currency markets. Japanese ministers said they remained vigilant about currency market movements, although the USDJPY pair traded comfortably above the 160-yen level that last prompted intervention in May.

Traders speculated that the government may have waited for low market volume over the July 4 Independence Day holiday before intervening.

Dollar stabilizes, Powell, payrolls and Fed minutes await

Asian trade steadied after rebounding from recent losses on Monday, with further clues coming from the Federal Reserve and U.S. interest rates this week.

He is due to speak at a European Central Bank conference on Tuesday, with further appearances scheduled for Wednesday.

Key data for June is due out Friday, and is expected to provide better insight into the labor market, which is also a key factor the Fed uses to cut interest rates.

The dollar saw some weakness last week as investors boosted their bets on a 25-basis-point rate cut in September. But many Fed officials said the central bank would need more certainty about cooling inflation before cutting rates.

Australian dollar falls as RBA meeting minutes disappoint

The Australian dollar fell 0.4% on Tuesday as the Reserve Bank of Australia’s latest meeting failed to provide clear signals on interest rate hikes.

Although the minutes of the meeting show that policymakers considered raising interest rates amid high inflation, they ultimately decided to keep rates steady.

ANZ analysts say there is “no hard evidence… to suggest that an August rate hike is on track for the RBA” and that they expect the bank to keep rates on hold until a cut in February.

However, UBS analysts say any further signs of high inflation could prompt an interest rate hike in August, pushing up inflation.

Broader Asian currencies were largely muted. The Chinese yuan remained at seven-month highs, while the Singapore dollar rose modestly. The South Korean won rose 0.5% as data showed it cooled more than expected in June.

The Indian rupee was trading around the 83 level, remaining close to recent record levels.