The dollar was capped below ¥114 in Tokyo trading on Monday, with traders waiting to see the outcome of a two-day policy-setting meeting of the Bank of Japan through Tuesday.
At 5 p.m., the dollar stood at ¥113.76-76, compared with ¥113.72-73 at the same time Friday. The euro was at $1.1139-1140, against $1.1142-1144, and at ¥126.73-74, against ¥126.75-76.
The greenback eased to levels around ¥113.60 in the early morning but advanced to around ¥114 in the midmorning, backed by brisk gains on Tokyo stock prices, as well as regular purchases by Japanese importers, traders said.
But the U.S. currency failed to extend its ascent later in the day, despite further dollar-positive factors, including higher U.S. stocks late last week, a rise in U.S. interest rates and a rebound in crude oil prices.
“There were lots of sell orders around ¥114, which dollar buyers could not break through,” said an official at a currency margin trading service provider.
Traders were also cautious before the BOJ Policy Board announces a policy decision following the two-day meeting.
While the central bank is widely expected to keep its current monetary policy intact, “we can’t rule out a possible surprise move,” said an official at a foreign exchange brokerage house. The BOJ stunned markets by introducing a negative interest policy earlier this year.
The U.S. Federal Reserve is also set to hold a policy review later this week, enhancing the wait-and-see mood, traders said.