The yen jumped to an 18-month high against the dollar on Tuesday, extending gains on persistent doubts the Bank of Japan will intervene to stem a dramatic rise that has undermined attempts to reflate the world's third-biggest economy.
The has risen over 12 percent against the dollar so far this year, extending gains after the BOJ surprised investors last week by refraining from more stimulus.
A further rise would intensify speculation of BOJ intervention sooner rather than later, as Japanese politicians have raised concerns about the yen's run-up.
"The bar for intervention is so high. At this stage, the market is skeptical whether they will follow through," said Steven Englander, global head of G10 FX strategy at Citibank in New York.
Japanese Prime Minister Shinzo Abe is due to visit Italy and Germany in a tour some believe he will use to try to set the stage for possible intervention in currency markets as Japan prepares to host a G7 meeting this month.
Attendees at previous G7 meetings have frowned upon intervention, and Tokyo is sensitive to criticism it is trying to engineer a weaker yen through ultra-loose monetary policy.
Last week, the dollar booked its biggest weekly drop since 2008, more than 5 percent against the yen.
The greenback fell slightly against the yen after hitting its lowest since October 2014, while the euro slipped 0.1 percent to 122.54 , hovering near its weakest levels in three years.
Media reports said Abe and French President Francois Hollande have described sudden moves in foreign exchange rates as undesirable.
Renewed anxiety about sluggish global growth stoked a sell-off in stock markets worldwide, pushing investors to the safety of low-yielding, liquid currencies.
The euro, another low-yielding currency like the yen, eased to $1.1513 but was little changed from Monday, after hitting $1.1616, its highest since August.
Sterling retreated from a four-month peak as a poll showed British voters who favor leaving the European Union hold a razor-thin edge over those who want to stay. The pound was down 0.8 percent at $1.4539.
The Australian dollar tumbled after the Reserve Bank of Australia cut interest rates by 25 basis points to a record lows 1.75 percent, with traders expecting more easing to fight deflation.