The Japanese yen fell to a six-week low against the US dollar on Tuesday, after the Bank of Japan’s (BoJ) governor said the country is in a “very severe state” due to the earthquake, triggering speculations over further monetary easing.

USD/JPY was up 1.01 percent to trade at 81.61 during European trading, its highest level since April 1.

“While we are still fundamentally positive on JPY, positioning alone may drive the current USD/JPY rally further. Last week's data showed IMM JPY shorts have been completely covered and it is likely they get rebuilt in coming sessions,” said a note from RBC Capital Markets.

The yen was also lower against the euro, with the pair EUR/JPY gaining 1.24 percent to hit 115.78.

Elsewhere, the single currency pulled back from a 7-week low against the greenback hit on Monday, amid concerns over the restructuring of Greece debt.

EUR/USD was up 0.3 percent to hit 1.4202, off from a 7-week low of 1.4048 hit on Monday.

The two-day meeting of Eurogroup/Ecofin Ministers approved a 78 billion euro ($110.3 billion) for the bailout of Portugal on Monday, with the leader of Ecofin Jean-Claude Juncker announcing discussions regarding “reprofiling” of Greece’s debt.

“However, France, Belgium and potentially Germany's opposition suggests that more volatility around support for Greece, and the euro, is not likely to be resolved soon and will continue over the next month. Hence, we expect EUR/USD gamma to stay well bid even as we settle in a range,” said a note from Societe Generali (SG).

The euro came under pressure in the recent sessions, as the concerns over the peripheral debt crisis weighed on the currency.

“Our conviction index shows that we have already reached a significant counter signal of analyst conviction, giving the first signs that the EUR/USD correction is overdone at least from a volatile perspective,” said SG.

Earlier on Monday, worries over the eurozone’s debt crisis heightened with the arrest of International Monetary Fund’s (IMF) chief Dominique Strauss-Kahn in New York on allegations of sexual assault.

“While we do not see this having any lasting impact on the euro area debt crisis, it brings unwelcome uncertainty to the euro area's debt crisis,” SG added.

Meanwhile, the British pound was up against the euro and the dollar, after a report showed that inflation rose more-than-expected in April, renewing speculations over interest rate hike by the Bank of England (BoE).

GBP/USD was up 0.26 percent to hit 1.6234, while EUR/GBP fell 0.1 percent to trade at 0.8732.

The UK Office of National Statistics said the consumer price index (CPI) rose 4.5 percent in April, while the markets had expected CPI to rise to 4.1 percent. The core CPI increased to 3.7 percent against the analysts’ expectation of increase to 3.4 percent in April.

“The basic picture remains one of inflation remaining above 4% for all of this year, with the possible exception of December. In 2012, the rate should drop sharply as the basis effect from the VAT increases drops out of the calculation but there is little chance of it returning to the target rate of 2% until the end of the next year. This is too long to wait and so the MPC needs to start gently increasing interest rates, even with the lacklustre growth outlook,” SG said.