The dollar came under pressure broadly and dipped from a six-week high against the yen, as investors took profits ahead of a meeting of Group of Seven finance officials later in the week.

Traders said this week's big theme will be any yen-friendly comments leading up to Friday's G7 meeting.

G7 officials in the past have said yen weakness runs counter to Japan's economic recovery and warned investors they could be burned making such one-way currency bets.

'The market is on the lookout for whether we will see a repeat of the run-up to the last G7,' said Fumihiko Kawano, a forex manager at Nomura Securities.

'If officials start talking about yen weakness and specific reasons for it, we could see a sharp rebound in the yen, and the market is wary of that,' Kawano said.

The dollar fell 0.45 per cent to 118.80 yen, pulling back from a six-week high of 119.39 yen hit last Friday.

A senior Japanese finance ministry official said some G7 finance officials may mention the yen at their meeting in Washington this Friday, but the issue will not be a key focus of the talks.

The euro traded up 0.60 per cent at $1.3430, recovering towards the two-year high of $1.3442 hit last week.

The single currency rose to 159.70 yen to renew its record high.

The Australian dollar soared against the dollar to 82.30 US cents, rising 0.8 per cent to hit its highest since 1990. Traders said robust economic data fanned speculation that Australia's central bank will increase interest rates next month.
The Aussie rose to a fresh 10-year high against the yen near 97.90 yen.

A hike next month could widen rate differentials with the US and Japan and encourage carry trades, in which investors use low-yielding currencies as a cheap source of funds to buy higher-yielding currencies.

The Bank of Japan will conclude a two-day monetary policy meeting later in the session and is widely expected to leave its key interest rate at 0.5 per cent.

Given weakness in the latest inflation data and tankan business sentiment survey, market participants expect the BOJ to wait until the second half of the year for the next rate hike.

'Fukui is unlikely to specify the timing of the next rate hike,' said Kengo Suzuki, a currency strategist at Shinko Securities. BOJ Governor Toshihiko Fukui holds a news conference from 3:30pm (0630 GMT).

Other key events for the market this week include Wednesday's release of minutes from the Federal Reserve's March monetary meeting. The Fed left benchmark overnight rates at 5.25 percent but dropped a phrase from its post-meeting statement pointing to further policy tightening ahead.

Reuters poll showed most Wall Street analysts expect the Fed to start cutting rates this year, but some pushed back the timing for an easing after Friday's jobs data showed a resilient labour market.

The European Central Bank is expected to hold euro zone rates at 3.75 per cent on Thursday but is seen preparing the market for a quarter-point rise at its next meeting in June.Reuters