The widening interest rate differential between the U.S. and Japan has pushed the yen lower since the Federal Reserve introduced monetary policy tightening. As a result, Japanese currency fell more than 0.5% on Friday after the Bank of Japan kept interest rates ultra-low and stuck to its stubbornly soft stance, while Governor Ueda similarly emphasized the need to spend more time evaluating data before raising interest rates.

Later on, Japanese yen approached the closely watched 150/USD – a level that some market watchers saw as an ultimate support level that would prompt Japanese authorities to engage in currency intervention similar to ones they undertook last year. It last traded at 148.35 per dollar level on Monday, September 25, falling to a more than 10-month low and had traders keeping a close eye on intervention after the Bank of Japan and its Governor Kazuo Ueda dashed hopes of any imminent departure from ultra-soft monetary policy.

Ueda stressed that the economic recovery is still too weak to see the policy tightening anytime soon. He added that the policy makers have reached an important turning point to take care of "the buds of change in the economy." And the authorities will "pay close attention to whether the moves to increase wages will continue, and whether the support of private consumption from the income side will be strengthened."

Regarding global inflation trends, Ueda said price increases "remain quite high compared to the central bank's targets." Meanwhile, Japan's finance minister issued a second warning to currency market participants a day after the yen hit its lowest level against the dollar since October. October was the month the authorities last intervened to support the yen.

In the broader currency market, the dollar also keeps leading the way and extending its gains from last week after a still hawkish Federal Reserve surprised markets by signaling that U.S. rates were expected to stay higher for longer than initially expected.