The yen tumbled to a six-month low against the dollar and a four-year trough versus the euro on Monday as a deal on Iran's nuclear program eased political anxieties and boosted optimism about economic growth, sending global stocks higher.
The Japanese currency typically falls when share prices rise, with some investors selling the low-yielding yen in search of greater returns with riskier assets such as equities.
The breakthrough accord reached over the weekend in Geneva - between Iran, the United States, China, Russia, France, Britain and Germany - halts Iran's most sensitive nuclear activities and gives it some relief from crippling sanctions, but does not allow the OPEC member to boost oil sales for six months.
the dollar was up 0.4 percent at 101.78 yen, having earlier hit 101.91 yen, its strongest since late May.
Positioning data last week showed speculators increased net short positions in the Japanese currency to their highest in six years.
Traders said some investors were reluctant to be short of dollars before Thursday's U.S. Thanksgiving holiday.
"The yen is being sold off as the funding currency of choice," said Jeremy Stretch, head of currency strategy at CIBC, adding the dollar could be heading towards 102.50 yen, a level last hit at the end of May.
The rose as far as 137.98 yen, its highest since October 2009. It last traded flat at 137.24 yen.
The dollar briefly pared gains after data showed contracts to buy previously owned U.S. homes fell for a fifth straight month in October, hitting a 10-month low and adding to signs of cooling in the housing market.
The euro fell against the dollar, however, after European Central Bank Governing Council member Ardo Hansson said he saw more room for the central bank to cut interest rates.
The euro fell 0.5 percent to $1.3498, with analysts and traders also saying lower oil prices may exacerbate concern about disinflationary pressures in the euro zone.
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