The yen touched a fresh 18-month high against the greenback early on Monday as its biggest weekly gain in over seven years tested the patience of Japanese officials concerned the rally will damage exports and the share market.

Finance Minister Taro Aso was quoted in Japanese media over the weekend as being unhappy with the yen's strength, saying it was extremely concerning.

The dollar fell as far as 106.14 yen, breaking through Friday's trough of 106.27. It slumped nearly 5 percent last week — a percentage fall not seen since 2008 — after the Bank of Japan refrained from adding fresh stimulus.

The euro was steadier at 122.00 yen, but still within a whisker of a three-year trough around 121.66 set last Friday.

"In our view, it will be difficult for the BoJ to justify intervening the foreign exchange market to weaken JPY especially after the U.S. Treasury placed Japan on a new FX ‘monitoring list,’ ” said Elias Haddad, strategist at Commonwealth Bank of Australia.

"But even if the BoJ intervenes to weaken JPY, USD/JPY is unlikely to sustain a move higher because of Japan's large current account surplus."

In a report to Congress, the U.S. Treasury Department said it is creating a new "Monitoring List" that includes China, Japan, Korea, Taiwan and Germany, to closely watch and assess the economic trends and foreign exchange policies of these economies.

It noted that "current conditions in the dollar-yen foreign exchange market are orderly," perhaps a hint to Japanese officials not to intervene to weaken the yen.

There was little reaction to a survey on China's manufacturing sector released on Sunday.

The report showed activity expanded for the second month in a row in April but only marginally, raising doubts about the sustainability of a recent pickup in the world's second-largest economy.

The Australian dollar, often used as a liquid proxy for China plays, edged up to $0.7615, from $0.7603 late on Friday.

All eyes are on an interest rate decision by the Reserve Bank of Australia (RBA) on Tuesday.

While a majority of economists polled by Reuters expect no rate move, a growing number are calling for a cut following a batch of disturbingly soft inflation numbers. 

Much of Asia is closed for the May Labor Day holiday on Monday and Japanese financial markets will be shut from Tuesday to Thursday for the Golden Week holiday.