The U.S. dollar extended gains versus the yen to rise 1 percent Tuesday amid broad-based strength in the greenback.

Comments from Japan's finance minister Yoshihiko Noda who warned the government would "act decisively" in currency markets if needed also weighed on the yen.

Investors have been wary of pushing the dollar lower after the euro repeatedly failed to hold above key resistance at $1.40.

Uncertainty over the extent of quantitative easing measures the Federal Reserve may take at its next policy meeting next week also helped spark a short-squeeze in the dollar.