The yen strengthened to its highest level since February, surpassing the peak reached after coordinated intervention by Japan and the US. The Japanese currency suddenly extended gains, up as much as 1.4% to 154.06 against the dollar in London trading. There was no clear driver for the move, with some traders pointing to the US holiday helping to exaggerate the moves while others mentioned the break of the key 155 per dollar level as a reason.

"The yen's break below 155 is significant given the level previously acted as a floor following past intervention episodes," said Masahiko Loo, senior fixed income strategist at State Street Investment Management. The yen embarked on a rally last week as growing trader bets on Bank of Japan interest-rate hikes fueled a sharp reversal in sentiment. That came after market participants questioned the long-term effectiveness of the coordinated intervention by Tokyo and Washington. Speculation over a potential shift in the Government Pension Investment Fund's asset allocation has also offered support to the currency.

Large stop-loss orders below the 155-per-dollar level were triggered and options dealers were forced to sell dollars, adding to the yen's gains. The yen gained 2.4% last week. "It feels like this could be the start of something bigger," said Van Luu, global head of FI and FX solutions strategy at Russell Investments.