The yen climbed off a five-month low against the euro on Monday and picked up versus growth-linked currencies as selling to fund carry trades abated, but investors will be looking at any rebound as an opportunity to sell the Japanese currency again.

There has been a significant rise in short yen positions so we are seeing a bit of a pullback ahead of a holiday in Japan, said Jeremy Stretch, head of currency strategy at CIBC World Markets. Japanese markets will be shut for a holiday on Tuesday.

These are opportunities to initiate fresh bearish positions and we expect dollar/yen to rise towards 85-85.50 yen while the euro having hit a high above 110 yen, is likely to consolidate.

Net shorts in the yen have risen significantly over the past three weeks. With Greek-related risks in the euro zone taking a breather, the euro has been supported against the safe-haven yen, while the Federal Reserve's not-so-dovish outlook has given dollar bulls a boost.

But given a sharp drop in recent days, the Japanese currency was due for some respite, traders said.

The euro was last changing hands at 109.45 yen, down 0.5 percent on the day, after rising to as high as 110.15 yen in the Asian session on trading platform EBS, its highest level since late October.

The Bank of Japan's surprise easing last month has boosted the yen's appeal as the currency of choice to fund carry trades where investors borrow a low-yielding currency to buy higher-yielding assets. A recent surge in U.S. Treasury yields also has made the dollar less appealing as a funding currency compared to the yen.

Additionally, March is typically a month that attracts Japanese corporate demand for yen ahead of Japan's fiscal year-end at the end of the month.

One traditional yen specific factor is the year-end yen buying by Japanese corporates and there has been some of that of late, said Valentin Marinov, Head of European G10 FX strategy at Citi.

This time around, however, we have also seen some USDJPY buying from Japanese energy importers. The latter could offset any USDJPY selling in coming days.

The higher-yielding Australian dollar last stood at 87.98 yen down 0.3 percent on the day, after earlier rising to 88.63 yen, its highest level since May 2011.

A speech by New York Fed President William Dudley, due later on Monday, could introduce some uncertainty about the Fed's stance, potentially pressuring the dollar.

Dudley is an arch dove and could reiterate the Fed's position that unless the U.S. jobless rate drops further, the chance of further stimulus could not be ruled out.

The dollar was little changed against a basket of currencies at 79.775 .DXY while the euro was slightly lower against the greenback, trading at $1.3160.

Despite some easing in euro zone tension, speculators are still running bearish positions in the euro, although they have trimmed some of those bets.

The dollar last stood at 83.03 yen, down 0.3 percent on the day and retreating from an 11-month high of 84.187 yen hit on Thursday. Traders reported sizeable demand around the 83.00 level and stop-loss dollar sell orders at 82.90.