The yen’s USD/JPY pair gained 0.2% to 154.50 yen on Tuesday, after dropping sharply in the prior session

Most Asian currencies moved in a tight range on Tuesday. The yen softened marginally after soaring to its highest level in almost three months on Monday following a warning on potential intervention from Prime Minister Sanae Takaichi.

The yen’s USD/JPY pair gained 0.2% to 154.50 yen on Tuesday, after dropping sharply in the prior session. The yen was also near its highest level in around three years.

The yen was aided by heightened speculation over government intervention in currency markets, especially after Prime Minister Takaichi warned against excessive volatility in the currency.

The yen bounced back sharply from recent lows after the Bank of Japan struck a hawkish note during its January meeting. But despite last week’s gains, the currency still remained in sight of levels that have attracted government intervention in the past.

Concerns over stretched fiscal spending under Takaichi had sparked a dire selloff in Japanese government bonds, which in turn pressured the yen.

Some Asian currencies moved little in anticipation of a U.S. central bank interest rate decision on Wednesday.

The country’s central bank is widely expected to leave rates unchanged, amid a slew of mixed cues on the country’s economy. The central bank is expected to stay on hold until it has more clarity on the country’s economy.

Concerns over fiscal policy and the central bank’s independence also kept markets broadly cautious. This weighed on the dollar and kept Asian currencies trading rangebound.

The dollar index and dollar index futures steadied in Asian trade after logging deep losses last week.

The yuan’s USD/CNY pair gained marginally but remained near its highest levels in 2-½ years.

The Singapore dollar’s USD/SGD pair was flat, while the Australian dollar’s AUD/USD pair also moved sideways.

The won’s USD/KRW pair added 0.1%, with the won weakening slightly.