The greenback declined on Monday, plunging from a six-month high touched earlier, while the Japanese yen rose as a result of remarks made by Bank of Japan Governor Kazuo Ueda that suggested a probable shift in monetary policy.

Sharp yen advances on Monday, with USD/JPY down 1.2% at 146.06 as BOJ chairman Kazuo Ueda hinted at a probable shift away from negative interest rates, pulled the dollar index lower.

Given the widening interest rate spreads, this exceptionally loose monetary policy has been a major factor in the yen's decline to 10-month lows against the dollar.

The BOJ could have enough information by year's end to decide whether rates should remain zero, according to Ueda, who also noted that the bank's 2% inflation objective was almost within reach, allowing policymakers to start thinking about tightening monetary policy.

EUR/USD edged up 0.2% to 1.0724, surging from the lowest level in three months reached last week as traders get ready for the European Central Bank's policy-setting meeting on Thursday.

GBP/USD 0.4% to 1.2518, traders are eagerly awaiting Tuesday's release of July compensation data, which could indicate a drop in pay inflationary pressures, as the market is also recovering from a three-month low struck last week.  

USD/JPY edged down by 1.2% at 146.06, Kazuo Ueda, as the head of the BOJ, signaled a probable shift away from negative interest rates.