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LONDON/SINGAPORE, June 30 (Reuters) - A steady rise in the dollar sent the yen to levels not seen since 1986 on Tuesday, raising fears that direct intervention from Tokyo was imminent, if not immediate, and also putting the euro under pressure.

The dollar climbed to 162.41 yen for the first time in 40 years today, and was last trading at 162.15, a slight increase for the day. Japanese Finance Minister Satsuki Katayama reiterated that authorities are prepared to act appropriately at any time, avoiding stronger language.

“The market has moved to price in a greater likelihood of the Federal Reserve raising interest rates, ” Hardman, a currency trading analyst at MUFG, told me. “While we see the Fed ultimately being able to ignore this rise in inflation, there is no immediate trigger for it unless we get weaker data or Fed officials tone down their rhetoric.”

Inflation in the United States remains well above the target level, while the economy continues to grow. Updated quarterly projections from Federal Reserve policymakers at this month's meeting showed that nine out of 19 now expect interest rates to rise by the end of the year.

The US jobs data due on Thursday will be of great interest.

The dollar index, which measures the performance of the US currency against other major currencies, recovered some of its overnight losses to reach 101.32 in its latest reading, and is on track to achieve a 1.4 percent gain this quarter after rising 1.6 percent in the first three months of 2026.

The euro fell 0.24 percent to $1.1396, not far from its lowest level in a year, which it hit last week.

The European Central Bank raised interest rates earlier this month, and markets expect it to do so again by the end of the year, although if inflation slows and the economy struggles, there is a possibility that it will not.

The British pound fell 0.2 percent to $1.3234, and commodity-exporting currencies came under pressure as oil and gas prices declined. The Norwegian krone hit a six-month low of 9.951 against the dollar and a five-month low of 11.31 against the euro.

The Canadian dollar traded at 1.4228 against its US counterpart, near its lowest level in 14 months reached last week. The Australian dollar hit a three-month low of 0.6867.