The dollar jumped against the yen on Tuesday, nearing a two-week high as the Japanese currency was pressured by a political scandal engulfing Prime Minister Shinzo Abe's govermment.
The yen weakened by 0.3 to 0.5 percent against other major currencies after Japan’s ministry of finance said on Monday it altered documents related to a discounted sale of state-owned land to a school operator with ties to Abe’s wife.
The dollar is also benefiting from the decline in broader currency market volatility which is encouraging investors to add positions in higher-yielding currencies, though the greenback’s gains were capped before monthly U.S. inflation data.
The dollar was trading at 106.95 against the yen, up 0.5 percent and just below a two-week high of 107.05.
The euro was broadly flat around $1.2329 against the dollar on the day.
A key focus for investors is the U.S. CPI data due at 1230 GMT. Median forecasts by economists polled by Reuters point to annual core CPI inflation of 1.8 percent in February, which would be flat from January.
A higher reading could stoke expectations that the Federal Reserve will likely raise interest rates four times, rather than three times, this year.