The Japanese yen depreciated against its major rivals in the European session on Wednesday, amid a growing policy gap between the U.S. Federal Reserve and the Bank of Japan.

Fed Governor Lael Brainard said on Tuesday that the central bank will raise interest rates rapidly to a level that neither stimulates nor slows the economy this year.

"We are doing that by tightening monetary policy methodically, and it is through a series of interest rate increases as well as beginning that balance sheet runoff," Brainard added.

Brainard's comments came after data showed that U.S. consumer inflation accelerated at the fastest rate since 1981 in March.

The Fed's policy stance is in contrast with the BoJ, which is expected to maintain ultra-loose monetary policy to support economic recovery.

The fall in the yen prompted Japanese Finance Minister Shunichi Suzuki to warn that a rapid movement in foreign exchange rates is "very problematic."

"The government will monitor the market closely with a sense of tension," Suzuki said.

The yen touched 126.32 against the greenback, its lowest level in nearly twenty years. If the yen slides further, it may find support around the 128.00 level.

The yen weakened to more than a 7-year low of 135.43 against the franc and more than a 2-week low of 164.07 against the pound, down from its prior highs of 134.30 and 162.91, respectively. The yen is seen finding support around 137.00 against the franc and 167.00 against the pound.

The yen dropped to a 2-day low of 136.75 against the euro and more than a 2-week low of 99.93 against the loonie, off its early highs of 135.68 and 99.07, respectively. The yen is likely to face support around 139.00 against the euro and 101.00 against the loonie.

In contrast, the yen recovered to 93.21 against the aussie, from a 1-week low of 93.87 seen earlier in the session. On the upside, 90.00 is likely seen as the next resistance level for the currency.

The yen rose to a 2-day high of 85.05 against the kiwi, after dropping to more than a 2-week low of 86.66 in the previous session. The yen may challenge resistance around the 83.00 level.

Looking ahead, at 10 am ET, the Bank of Canada will announce its interest rate decision. The BoC is widely expected to raise interest rate to 1 percent from 0.5 percent.

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