The dollar fell from 2 1/2-year peaks against the yen on Monday in subdued trading as investors locked in profits after the greenback's recent rally, although its uptrend is likely to hold given expectations of further monetary easing in Japan.
The euro slid from an 11-month high against the dollar set on Friday, with traders reporting option barriers starting from $1.3480.
But analysts said the common currency looked poised for further gains, which could lift it toward the psychologically important $1.35 level.
Selling the yen has been a one-way trade since mid-November as investors believed Japan's new Prime Minister Shinzo Abe will push the Bank of Japan into more forceful monetary easing to beat deflation.
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Increasing rhetoric from Japanese authorities that they are open to the dollar rising to the 100 yen level has helped weaken the currency further, raising eyebrows abroad and sparking talk that Japan is triggering a currency war.
"It's not a question of direction in dollar/yen, which is higher. It's a question of the pace of the dollar/yen's climb," said Michael Woolfolk, senior currency strategist at BNY Mellon in New York.
Woolfolk expects the dollar to maintain its gains above the 90 yen level in the short term, climb to 94 by mid-year and 98 by the end of the year. "100 (in dollar/yen) is a foregone conclusion, but it will be a story for 2014," he said. The dollar fell 0.1 percent to 90.78 yen.