(Updates prices at 0445 GMT)
The yen jumped sharply on Monday after it slid past 160 per dollar earlier in the session, leading to speculation that Tokyo could have intervened in the currency market while the country was out for a holiday.
The yen JPY=EBS strengthened about 2% from the initial 159 per dollar level in a matter of a few minutes during Asia hours, as some traders said selling of dollars was seen onshore.
The rapid move came just a few hours after the yen tumbled to the weaker side of 160 per dollar for the first time in 34-years.
"The move has all the hallmarks of an actual BOJ intervention and what better time to do it than on a Japanese public holiday which means lower liquidity in USD/JPY and more bang for the BOJ's buck," said Tony Sycamore, a market analyst at IG.
The yen was last 1.9% higher at 155.43 per dollar. Elsewhere, Asian stocks got off to a positive start ahead of the Federal Reserve's policy meeting later in the week, while oil prices ticked down on expectations that higher-for-longer U.S. interest rates would dampen demand.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS tacked on 1%, helped by Wall Street's positive lead on Friday due to a rally in mega cap growth stocks.
The upbeat sentiment spilled over into the new week, with Nasdaq futures NQc1 rising 0.36% and S&P 500 futures gaining 0.27%.
Hong Kong's Hang Seng Index .HSI similarly advanced 1.3%, while China's blue-chip index .CSI300 edged 1.4% higher.
The Fed's two-day monetary policy meeting beginning Tuesday takes centre stage for the week, where expectations are for the central bank to keep rates on hold.
Focus, however, will be on any guidance for the central bank's rate outlook, after repeated runs of stronger-than-expected U.S. economic data and still-sticky inflationary pressures derailed market bets on how soon the Fed could commence its rate easing cycle.
Market pricing shows a first Fed rate cut is expected in September, from a June start only a few weeks ago, with just over 30 basis points worth of easing expected this year. FEDWATCH
"We've seen quite a significant repricing of rate expectations in the U.S., and that's kind of a benchmark for global interest rates," said Jarrod Kerr, chief economist at Kiwibank.
"I think the Fed this week will kind of echo those comments that rate cuts aren't as close as they had hoped."
The prospect that U.S. rates would remain in restrictive territory for longer have propped up the greenback, though it was broadly on the back foot on Monday.
Against the dollar, the euro EUR=EBS rose 0.38% to $1.07315, while sterling GBP=D3 gained 0.42% to $1.2548.
The dollar index =USD fell 0.46% to 105.47, though was headed for a monthly gain of 1%.
In commodities, Brent LCOc1 fell 0.9% to $88.70 a barrel, while U.S. crude CLc1 similarly eased 0.85% to $83.14 per barrel, with news of a potential Gaza ceasefire also easing fears of supply constraints.
A Hamas delegation will visit Cairo on Monday for talks aimed at securing a ceasefire, a Hamas official told Reuters on Sunday, as mediators stepped up efforts to reach a deal ahead of an expected Israeli assault on the southern city of Rafah.
Gold XAU= dipped 0.21% to $2,332.72 an ounce.
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