The dollar weakened to around ¥110.30 in Tokyo trading Tuesday, hit by position-squaring and profit-taking selling.

At 5 p.m., the dollar stood at ¥110.29, down from ¥110.63 at the same time Monday. The euro was at $1.1818, up from $1.1743, and at ¥130.36, up from ¥129.92.

The dollar slipped through ¥110 in overnight trading due to a fall in U.S. long-term interest rates caused chiefly by a record-breaking improvement in the nonmanufacturing purchasing managers’ index for March released by the Institute for Supply Management.

But the U.S. currency recovered to around ¥110.30 in midmorning trading thanks to buying by Japanese importers for settlement purposes, and to around ¥110.40 in the early afternoon also aided by short-term players’ purchases.

After falling into the ¥110.10 zone in midafternoon trading on selling instigated by the Nikkei average’s plunge, the dollar climbed back to levels close to ¥110.40 yen as the U.S. interest rates picked up in off-hours trading. The dollar’s advance against the euro also prompted players to buy the greenback vis-a-vis the yen.

In view of thin trading due to the three-day Qingming Festival holidays for Chinese people and a dearth of market-moving factors, “participants moved to slow down the dollar’s fast appreciation against the yen,” a Japanese bank official said.

A currency broker, however, said, “The dollar is expected to remain firm against the yen and the euro, as the economic outlook of the United States is brighter than that of Japan and Europe.”

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