The yen’s USD/JPY pair dropped 0.7% on Tuesday, declining from some its highest levels this year after a warning from Finance Minister Satsuki Katayama

Most FX currencies firmed on Tuesday, with the yen rebounding after Tokyo issued a strong warning that it will intervene in currency markets.

The yen’s USD/JPY pair dropped 0.7% on Tuesday, declining from some its highest levels this year after a warning from Finance Minister Satsuki Katayama.

Katayama said recent moves in the yen were driven by speculation and did not reflect market fundamentals, and warned that the government would take “appropriate action against excessive moves.”

Katayama’s warning was the most decisive yet to date from Tokyo over bets against the yen, and sparked a sharp recovery in the currency on fears of government-driven dollar selling.

Tokyo has in the past intervened with USD/JPY in the 155 yen to 160 yen range.

The dollar index and dollar index futures dropped more than 0.3% in European trade, after a middling session on Monday. The EUR/USD gained around 0.3% by 09:35 GMT, while GBP/USD rose nearly 0.4%.

The dollar was hit by caution ahead of key numbers on the U.S. economy, which were delayed by a government shutdown in October and early-November.

The dollar dropped in holiday-thinned trade, with focus squarely on upcoming gross domestic product (GDP) and personal consumption expenditures (PCE) index readings due later in the day. Both figures are likely to factor into expectations for U.S. interest rates going into 2026.

Asian and European trading volumes were also dulled by the year-end holidays, with most currencies sitting on annual gains against the dollar. The yen was also mostly unchanged against the dollar in 2025 after logging big swings through the year.