The US dollar rose for a second day against the yen on Tuesday as some traders bet the Federal Reserve may signal it is almost ready to reduce its bond buying program aimed at propping up the economy. The euro hit a four-month high against the dollar after a survey showed German analyst and investor sentiment rose for a second straight month in June, suggesting Europe's largest economy is on track for a modest recovery.
The dollar rose 0.8 percent to 95.25 yen having hit a two-month low of 93.78 yen on Thursday. A reported options expiry at 95.35 yen could keep the pair close to that level. The euro rose 1 percent to 127.63 yen. Against the dollar, the euro rose 0.2 percent to $1.3398, having reached a four-month high of $1.3415. The dollar index, which measures the greenback versus a basket of currencies, slipped 0.2 percent to 80.657.