The yen rose against the U.S. dollar on Friday for a fourth straight day and gained ground versus the euro as investors unwound bets against the Japanese currency due to uncertainty whether central banks will maintain their easy monetary policies.
With the Federal Reserve's next policy meeting just a few days away, there has been increasing focus—and growing uncertainty—over when the U.S. Federal Reserve might pull back from flooding the market with dollars, a policy meant to spur borrowing and investment to bolster a sluggish economy.
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In addition, doubts over the Bank of Japan's commitment to its inflationary policies has caused some investors to exit their use of profitable carry trades in the yen. That practice involves using the low-yielding yen to fund purchases of higher-yielding assets, such as U.S. stocks.
"The strength against the euro doesn't surprise me because the dollar and yen strength tend to be consistent with a loss of risk appetite. We are in a more risk-averse mode," said Michael Woolfolk, global markets strategist at BNY Mellon.