The Japanese currency strengthened 0.1 percent to 122.44 per dollar in early Asian trading, after rising 0.4 percent last week. The euro weakened 0.5 percent at 131.23 against the yen, falling below the support levels at mid-131.
Meanwhile, data released before the Tokyo market open on Monday showed Japan's economy slipping back into recession in the third quarter. Gross domestic product (GDP) contracted an annualized 0.8 percent in the July-September period, worse than the estimate for a 0.2 percent contraction by economists polled by Reuters and following a 1.2 percent fall in the preceding quarter.
However, some analysts say the disappointing GDP print may not spur the Bank of Japan (BOJ) to step up its already massive quantitative easing (QE) program when it convenes its monthly two-day policy meeting on Wednesday.
"We don't think further stimulus is in the pipeline for now and the GDP print doesn't change the picture," Izumi Devalier, Japan Economist at HSBC, told CNBC Asia's "Squawk Box" on Monday. "Our stance is that the BOJ and the government are comfortable with where the yen is. Unless there's a significant deflationary shock in the form of a very strong currency or a significant decline in equities, their inclination is to hold."
In the near term, expectations for the Federal Reserve to raise its key short-term rate from near zero by December may also influence the dollar-yen.
According to the CME Group, the probability of a December lift-off rose from about 58 percent to about 70 percent, after the October nonfarm payrolls report — released October 6— showed the U.S. economy added 271,000 jobs.
"Obviously after the payroll numbers which were very strong, it's clearly a done deal now for a hike in December," said Mitul Kotecha, head of Asia FX and rates strategy at Barclays.
So tell us what you think is the biggest driver of the yen right now: