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The yen hit its highest level in more than a year on Monday in thin trading due to a holiday in Japan, as traders expect the Federal Reserve to issue a decision this week to cut interest rates sharply.
Asian trading was slow, affected by holidays in Japan, China and South Korea.
The dollar fell 0.47 percent to 140.15 yen, retreating further from its lowest level since late December, which it reached on Friday at 140.285, levels not seen since July 2023.
The dollar fell 1.3 percent against the yen last week.
The US Federal Reserve’s meeting scheduled for tomorrow, Tuesday, and the day after tomorrow, Wednesday, comes in a week full of monetary policy meetings, as interest rate decisions are also expected to be issued by the Bank of England and the Bank of Japan on Thursday and Friday.
Market speculation over the size of the Fed rate cut this week has shifted over the past month, driven by comments from Fed officials and economic data, with markets debating whether the central bank will respond to the weak labor market with an aggressive rate cut or whether it will take a slower approach and wait for more clues.
The pound rose 0.23 percent to $1.3155 and briefly touched a 10-day high of $1.31625.
The euro also rose 0.2 percent to $1.1096. The dollar index fell 0.15 percent to 100.87.
The European Central Bank cut interest rates by 25 basis points last week but its president, Christine Lagarde, has scaled back expectations of another cut next month.
