The yen tumbled to its weakest level in four decades against the dollar on Tuesday, breaching 162.40 in Asian trading before easing slightly to 162.08. The slide pushed the Japanese currency to its lowest point since 1986, driven by shifting investor sentiment toward riskier assets.

Risk-on momentum returned after signals that U.S.-Iran peace talks would resume and tech stocks lifted Wall Street overnight. Safe-haven currencies typically suffer when investors favor equities over bonds. Meanwhile, market expectations suggest the Bank of Japan will maintain its gradual approach to rate hikes while the Federal Reserve appears poised to tighten monetary policy more aggressively.

Japanese Finance Minister Satsuki Katayama warned that authorities stand ready to intervene decisively in the foreign-exchange market. She confirmed discussions with U.S. officials about potential currency support measures, though stopped short of specifying timing or scale. Traders remain on high alert for any official action.

The yen's weakness reflects broader pressure on export-dependent economies facing rising U.S. rates. With intervention now on the table, currency markets face heightened volatility as policymakers balance domestic monetary policy with exchange rate stability concerns.