The Japanese yen weakened slightly against the US dollar, approaching a critical level that could intensify speculation about another government intervention to support the currency.

With Tokyo markets closed on Tuesday for a public holiday, trading was relatively subdued, but traders are bracing for the yen to slide toward 160 per dollar. This level has historically acted as a barrier against further depreciation.

During London trading hours, the yen slipped 0.1% to 159.39 per dollar. On Monday, the yen posted its largest single-day decline since mid-February, falling 1% as the dollar strengthened against most G10 currencies.

The yen has now erased nearly half of the gains it made since July 31, when Japan and the US conducted their first coordinated intervention since 1998 to support the currency.

Masayuki Nakajima, a senior strategist at Mizuho Bank, wrote in a report: "If USD/JPY clearly breaks above the psychologically significant 160 level, market concerns about intervention could further intensify."