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The dollar pared gains to trade at levels around ¥106.20 in lackluster Tokyo trading Monday.

At 5 p.m., the dollar stood at ¥106.19, up marginally from ¥106.15 at the same time Friday. The euro was at $1.1838, almost flat from $1.1839, and at ¥125.70, unchanged.

After hovering around ¥106.25, the dollar climbed close to ¥106.40 in midmorning trading thanks chiefly to buying by Japanese importers for settlement purposes. But the greenback turned to weaken in line with a fall in the 225-issue Nikkei average later in the morning and lost further ground in the afternoon.

Amid a dearth of major trading incentives due to the three-day Labor Day weekend in the United States, players retreated to the sidelines to "wait to see U.S. stocks' moves" after the holiday, an official at a foreign exchange margin trading service firm said.

A currency broker said the dollar-yen pair is expected to "struggle for direction for the time being," pointing to Thursday's policy meeting at the European Central Bank and uncertainties over a fresh U.S. stimulus package.

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