The euro gained for a second straight session against the dollar on Monday, benefiting from technical factors as well as expectations that the European Central Bank will refrain from cutting interest rates at its meeting later this week.
The U.S. currency, meanwhile, retreated from a 2-1/2 year high against the Japanese yen as a robust appreciation over weeks had investors opting to book profits despite forecasts of further Bank of Japan stimulus later in the month.
With U.S. economic data scant this week, currency trading will likely be driven by the ECB's meeting on Thursday, comments from an array of Federal Reserve speakers and sentiment in other asset classes, such as stocks.
"Euro/dollar is being driven by expectations that the Fed will maintain an easy monetary policy stance, which drives the currency pair higher," said Sebastien Galy, forex strategist at Societe Generale in New York.
"Bouts of risk aversion are more likely to hit yen crosses via sentiment, given how much they have moved in the past weeks," he said.
Minutes from December's Fed meeting released last week raised expectations that the central bank could end its bond-buying program, called quantitative easing, this year, but a lackluster non-farm payrolls report last Friday has some expecting the U.S. central bank to maintain the status quo.