By Saikat Chatterjee

LONDON (Reuters) – The Japanese yen weakened past the 126 yen per dollar mark on Wednesday for the first time since 2002 while the euro was pinned at a one-month low as investors flocked to the U.S. currency after some hawkish comments by Federal Reserve officials.

Though U.S. monthly underlying inflation pressures showed some signs of moderation in Tuesday’s data, traders ramped up bets that the U.S. central bank will accelerate its monetary tightening measures this year.

Also weighing on the euro was Russian President Vladimir Putin’s description of on-and-off negotiations to end the war in Ukraine as “a dead-end situation” on Tuesday.

In addition, German lawmakers called for an embargo on Russian oil as soon as possible, which if implemented would further weigh on the region’s growth prospects.

“The dollar will continue to do well versus the low yielders such as the euro and the yen,” said Kenneth Broux, an FX strategist at Societe Generale in London.

“In contrast to German bond yields, the pre-ECB bounce in the euro isn’t happening,” Broux said referring to the European Central Bank’s meeting on Thursday.

Against a basket of six major currencies, the dollar edged 0.1% up to 100.52, its highest levels since April 2020. It has gained nearly 3% so far this month and is on track for its biggest monthly rise in nine months.

The yen led losers against the dollar with the Japanese unit weakening 0.8% to cross the 126 yen to the dollar level for the first time since May 2002.

Elsewhere, the kiwi was buffeted after the Reserve Bank of New Zealand announced its sharpest rate hike in two decades to curb inflation.

While the 50 basis point rise by was larger than many economists had expected, it was within traders’ expectations, and policymakers tempered the move by not lifting their projected peak for rates.

The euro fell to $1.0821 overnight, its lowest level against the dollar in more than a month and hovered nearby at $1.0837 in early London trading.

The Australian dollar and the offshore Chinese yuan weakened slightly after a surprise plunge in China’s imports added to investor worries about weakening demand.

(Reporting by Saikat Chatterjee; Editing by Tomasz Janowski)