The yuan firmed slightly, with the USD/CNY pair dropping 0.1%, while the yen’s USD/JPY pair steadied above 156 yen

Most Asian currencies firmed slightly on Tuesday. Currencies recovered a measure of recent losses as markets reversed course and began aggressively pricing in a December rate cut in U.S. But this notion had a limited impact on the dollar, especially as concerns over fiscal health in some countries kept traders pinned to the dollar.

The yuan gained some ground, while the yen remained pinned near its lowest levels in more than 10 months. A diplomatic row between the two countries weighed on sentiment in Asian markets.

The yuan firmed slightly on Tuesday, with the USD/CNY pair dropping 0.1% on the prospect of improving China-U.S. relations. U.S. President Donald Trump said he will visit Beijing in April.

The yen’s USD/JPY pair steadied above 156 yen, remaining in territory that has drawn government intervention in the past.

Japanese government officials offered vocal warnings against further yen weakness. But the government was not seen intervening in currency markets so far.

We believe the risk on leaning against the wind is real if we do see another sharp weakening in the JPY towards the 158-160 zone. But for USDJPY to reverse trend and trade lower meaningfully would require policymakers to demonstrate fiscal discipline to restore credibility while the BOJ also need to resume policy normalisation, OCBC analysts wrote in a note.

Tensions between Japan and China also remained elevated, after Beijing strongly objected to comments from Tokyo on military intervention in Taiwan.

Broader Asian currencies kept to a tight range. The Australian dollar’s AUD/USD pair declined 0.1%, while the Indian rupee’s USD/INR remained well above 89 rupees.

The won’s USD/KRW pair was flat, as was the Singapore dollar’s USD/SGD pair.