Expectations of forceful action from the BOJ have caused the dollar to gain smartly against the yen since late 2012. The greenback is about 10.7 percent higher so far this year, by far one of the strongest performances in the foreign exchange market.
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In the options market, near-term risk reversals, which measure relative demand for put and call options, flipped toward yen calls, or bets the yen will rise further, from puts, or bets it would weaken. This gave the yen some support, traders said, and cited profit-taking on long dollar positions.
"It looks like that the option market is not at all convinced that we will imminently see a second leg of yen weakness," said Olivier Korber, FX derivatives strategist at Societe Generale in Paris.
Nevertheless, dollar/yen has 100 in its sights.
The dollar index, which measures the greenback against a basket of other currencies, was nearly unchanged at 82.57. It hit a seven-month high of 82.924 on Friday after the release of data that showed above-forecast U.S. jobs growth.
The jobs data lifted yields on U.S. Treasuries, which tend to have strong positive correlation with dollar/yen as higher yields are thought to attract more bond investments.
Brighter US Outlook
Any pullback in the dollar could present a fresh buying opportunity to investors looking to add positions in favor of the greenback given an improving U.S. outlook just as other developed economies, including Britain, the euro zone and Japan are either struggling with recession or deflation.
The euro fell 0.1 percent to $1.3035, holding above Friday's three-month low of $1.2955. Traders reported option expiries at $1.3000 which would keep the currency tied around those levels.
"The market has not fully taken the idea of a European Central Bank rate cut off the table," PIMCO's Emons said.
"There is still a big difference in interest rates and lending rates, and with the ECB last week revising its inflation forecast downward, that gives it room to start working on a rate cut, which I expect to happen by the second quarter or third quarter," he said.
The euro is vulnerable to more selling, with the austerity-hit euro zone's economy expected to face an uphill battle to recover from recession.
"The euro should remain contained to a range of $1.30 to $1.40 over the next three to six months, but it should mostly stay on the weaker side at $1.30 or slightly below," Emons said.
Against the yen, the euro traded 0.3 percent lower on the day at 125.18 yen, below a 34-month high of 127.69 reached last month, according to Reuters data.