The dollar rose past ¥110 in Tokyo trading Tuesday, helped by real demand-backed buying and higher stock prices.

At 5 p.m., the dollar stood at ¥110.04, up from ¥109.69 at the same time Monday. The euro was at $1.2144, up from $1.2117, and at ¥133.61, up from ¥132.91.

Lifted above ¥110.00 overnight by higher U.S. long-term interest rates, the dollar rose further to levels around ¥110.10 in midmorning trading thanks to the 225-issue Nikkei average’s sharp rally and Japanese importers’ buying for settlement purposes.

But dollar-buying lost steam following a dip in the U.S. interest rates in off-hours trading. In addition, players retreated to the sidelines as the U.S. Federal Reserve’s two-day Federal Open Market Committee meeting loomed, traders said.

Active trading was also held in check ahead of the release later in the day of the U.S. wholesale price index for May, among others, they added.

Players are particularly watching closely when the Fed will start discussing tapering its quantitative easing and whether or not the U.S. central bank will change in its main scenario in which long-term interest rates will be kept at near zero until the end of 2023.

“If an early start of tapering or tightening is suggested at the policy-setting meeting, dollar-buying will gain momentum,” an official at a foreign exchange margin trading service firm said.

The current levels of the 10-year Treasury yield below the 1.5% threshold are “low enough to allow the Fed to launch discussions on tapering bond purchases,” a securities firm official pointed out.

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