A forthcoming change in BOJ leadership is expected to weigh on the yen, given expectations for Prime Minister Shinzo Abe to appoint a governor favoring loose monetary policy. Current governor Masaaki Shirakawa's term ends in April.
The euro fell 0.7 percent to 117.36 yen, pulling away from a 20-month peak of 120.73 yen reached on Friday.
Still, many analysts saw the yen weakening over the medium- to longer-term, based on expectations the BOJ will remain under pressure to inject more stimulus into the economy.
"I continue to believe that this (BOJ) move is consistent with the shift in attitude and in the direction of policy, which will deliver a higher dollar/yen level over the coming year, and an overshoot above 100 in due course," said Kit Juckes, foreign-exchange strategist at Societe Generale.
LTRO Repayment Ahead
The euro dipped 0.1 percent against the dollar to $1.3305, holding within sight of last week's 11-month high of $1.3404. Market players reported supporting bids at $1.3275-85.
Some strategists said the euro would find some support ahead of an announcement on Friday on the size of next week's first repayments of three-year loans taken by banks from the European Central Bank a year ago.
Banks took more than 1 trillion euros in ultra-cheap LTRO (loan-term refinancing operation) loans from the ECB. A Reuters poll showed traders expected about 1 billion euros to be paid back next week.
Nomura's Kendrick said investors would see the repayments as a move to tighten monetary policy by the ECB, in sharp contrast to the U.S. Federal Reserve and BOJ asset purchase schemes.
"Relative to other central banks the ECB is at least flat-lining and at best shrinking its balance sheet. We will wait for the LTRO repayment and if that's a bigger number than expected euro may break the highs around $1.34," he said.
Deutsche Bank strategists said in a note they viewed the LTRO repayments as a major positive for the euro, and were targeting a break above $1.35.