The dollar steadied on Monday as traders grew wary that Japan might step into the market after the US currency raced to a five-month high versus the yen during the previous session on suspected intervention.
Market players were exasperated by the most recent indication that Japan may have intervened.
"Nobody knows what's happening with the dollar/yen. Maybe you should ask the Ministry of Finance what's going on," said Kosuke Hanao, head of forex sales at Royal Bank of Scotland.
The dollar rose more than one yen on Friday to a high of 112.30 yen despite falling against other major currencies on surprisingly soft US jobs data.
The dollar was at 112.07/12 yen, up only slightly from late US levels on Friday.
While the dollar climbed against the yen in the face of the jobs data, it was licking its wounds after taking a beating from other currencies.
The euro was at $1.2377/82 after surging 1.5 percent on Friday on figures that showed only 21,000 jobs were created last month, compared with an increase of 97,000 in January.
The news drove the dollar down 1.3 percent to $1.2759 against the Swiss franc, while sterling rose around the same amount to $1.8458. Both currencies stayed near those levels on Monday.
Traders said mixed messages were being sent to the market regarding currencies other than the yen, with US monetary authorities saying as late as last week that interest rates had to rise eventually.
Since then, however, the dollar has weakened in light of the weak jobs report that dimmed prospects for an interest rate hike in the near future.
"There's a mixed feeling in the market right now," said Hanao.
"Traders want to sell dollars, but people like (Fed Chairman Alan) Greenspan and (US Treasury Secretary John) Snow keep saying that we'll see a turnaround in the economy, so trading is likely to be range-bound for a while."
The yen, meanwhile, was being pressured by other major currencies, hitting lows against the euro not seen since June and probing 5-1/2 year troughs against sterling.
The euro was hovering at 138.73/78 yen little changed after gaining 2.4 percent or about three yen on Friday.
Against sterling, the Japanese currency was trading at 207.09/19 yen.
The dollar's resilience against the yen once again points to possible massive dollar-buying by the authorities to buoy the currency and protect Japan's export-led recovery.
"They'll be stepping in whenever they feel necessary. They showed that after the jobs data came out," said Hanao, adding that Japan had no qualms about acting outside Tokyo trading hours.
But some traders said such dollar-buying could not last.
"I'm not convinced (the ministry) is going to continue doing this for several months coming," said Naomi Fink, senior currency analyst at BNP Paribas.
"I think this is a trend that's particularly inherent ahead of the financial year-end. I don't think they can keep it up forever."
The ministry has spent 10 trillion yen ($89.15 billion) to buy dollars so far this year, compared with 20 trillion yen for all of last year, a record in itself.
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