The Japanese yen advanced against its most major counterparts in the Asian session on Tuesday, as risk sentiment dampened amid continued worries over the Covid-19 outbreak in China and aggressive monetary policy tightening that risks a recession.

Investors fear that the tough restrictions implemented by Chinese authorities in the wake of its "dynamic Covid-zero" policy could harm economic growth.

Oil prices fell on demand concerns as recent rise in COVID-19 cases in China clouded the economic outlook.

U.S. consumer inflation data is due on Wednesday, with economists expecting a rise of 8.8 percent on year in June.

A strong inflation reading could increase pressure on the Fed to intensify its aggressive pace of tightening.

In economic news, producer prices in Japan were up 0.7 percent on month in June, the Bank of Japan said. That exceeded expectations for an increase of 0.5 percent following the upwardly revised 0.1 percent increase in May (originally flat). On a yearly basis, producer prices jumped 9.2 percent - again beating forecasts for 8.8 percent and down from the upwardly revised 9.3 percent gain in the previous month (originally 9.1 percent).

The yen rose to 4-day highs of 137.28 against the euro and 162.52 against the pound, following its prior lows of 138.08 and 163.55, respectively. If the yen strengthens further, it is likely to test resistance around 136.00 against the euro and 160.00 against the pound.

The yen touched a 4-day high of 83.72 against the kiwi and a 5-day high of 92.14 against the aussie, up from its early lows of 84.12 and 92.66, respectively. The yen is likely to find resistance around 80.00 against the kiwi and 90.00 against the aussie.

The yen was up against the franc, at 139.35. On the upside, 132.00 is seen as its next resistance level.

Against the loonie, the yen edged up to 105.19, off its prior low of 105.76. The yen may locate resistance around the 102.00 level.

In contrast, the yen retreated to 137.53 against the greenback, after rising to 137.03 earlier in the session. The yen is seen finding support around the 139.00 level.

Looking ahead, German ZEW economic confidence survey results for July are due in the European session.

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