The BOJ will conclude its two-day policy-setting meeting on Tuesday, and many Japanese investors believe the central bank will take additional easing measures. A likely step is to expand its programs to pump more cash into the money market.
Traders also said that the yen's loss could well be short-term.
If any central bank easing is less than or in line with market expectations, the Japanese currency will likely resume its rise, according to dealers in Tokyo, since some type of easing has already been factored into current levels. Such easing could also disappoint some short-term-focused funds, who expect the BOJ will take the radical measure of increasing its buying of Japanese government bonds from the market.
"The yen may shoot up if the BOJ's decision meets the market's mainstream forecast," said Hideaki Inoue, chief manager of forex trading at Mitsubishi UFJ Trust and Banking.
As of 0450 GMT, the dollar was at Y83.61 from Y83.32 Friday. It rose to as high as Y83.88 as European banks executed automated stop-loss buying orders at Y83.50, dealers said. Japanese importers were also active, they added.
In the longer-term, the dollar may remain weak against its Japanese counterpart because the U.S. Federal Reserve will likely take more easing measures than might the BOJ to help prop up slowing growth in the world's largest economy, dealers said.
Currency investors will watch for whether Japan's ministry of finance will intervene in the currency market again if the greenback falls below Y83.00. Japan in September sold the yen when the dollar was around Y82.95.
"If Japan does not act at where it acted before, investors may take that as a go-ahead to buy the yen more. In that case, the yen may start rising sharply," said Shinichi Hayashi, a senior dealer at Shinkin Central Bank.
Japanese officials, including Prime Minister Naoto Kan and Finance Minister Yoshihiko Noda, have repeatedly said that Tokyo will intervene again when necessary. But so far it has apparently remained quiet since Sept. 15, the day of Japan's first market intervention for more than six years.
Meanwhile, the euro rose to its highest since March 17 against the dollar due to pessimistic views over the U.S. economic outlook, dealers said, though the euro gave up all the gains due to profit-taking orders.
It was at $1.3764 as of 0450 GMT from $1.3784 Friday. Against the yen, it was Y115.08 from Y114.81. The single unit also hit its highest against the yen since May 18.
The ICE Dollar Index was at 78.196 from 78.076.