Investing.com - The dollar slid lower on Monday, retreating from three-week highs against the yen ahead of central bank meetings in the U.S. and Japan later in the week, while sterling also gave up early gains.
USD/JPY was down 0.36% at 111.31, off overnight highs of 111.88, the strongest level since April 1.
Trade volumes remained thin overnight, with markets in Australia closed for the Anzac day holiday.
The yen fell 2.1% against the dollar on Friday after Bloomberg reported that the Bank of Japan could expand the negative interest rate policy it put in place in January at the conclusion of its two day policy meeting on Thursday.
Some investors believe the bank will not roll out further easing measures as it continues to assess the impact of the negative interest rate policy it adopted in January.
Most analysts expect the BoJ to cut its forecasts for growth and inflation as the strong yen and a severe earthquake this month which has disrupted supply chains cloud the economic outlook.
Investors were also looking ahead to the conclusion of the Federal Reserve’s policy meeting on Wednesday.
The Fed, which hiked rates for the first time in almost a decade in December, is expected to hold steady for now, but investors will be looking at the bank’s rate statement for indications on the likelihood of a June rate hike.
The euro pushed higher against the greenback, with EUR/USD rising 0.27% to 1.1252.
The pound reversed early gains, with GBP/USD last at 1.4407, after jumping to five-week highs of 1.4468 earlier.
Sterling was boosted after President Barack Obama warned over the weekend that Britain would be at the “back of the queue” to arrange a trade deal with the U.S. in the event of a British exit from the European Union or Brexit.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.23% at 94.89.