The yen rose to a four-month high versus the euro on speculation the Bank of Japan will refrain from expanding stimulus at a meeting beginning tomorrow, diverging from the European Central Bank that added easing last week.
The pound headed for its biggest monthly drop against the dollar since October as investors judged a rally built on expectations the Bank of England will hasten plans to increase interest rates was losing momentum.
The euro fell to almost a three-month low amid signals from European policy makers of willingness to undertake further monetary easing and as anti-establishment political groups seek to win power at polls this weekend.
The dollar will rise versus most of its major counterparts over the next year and find particular strength versus its European peers as rate-cut expectations increase, according to Adam Cole of Royal Bank of Canada.
The pound posted its biggest weekly decline versus the dollar since July as signs the U.S. economy is strengthening fueled bets the Federal Reserve will slow stimulus that tends to debase the greenback.