The Japanese Yen strengthened against the EUR and the Dollar on concern credit market losses will keep increasing in Europe and the U.S., spurring demand for the relative safety of Japan's currency. The Yen strengthened to 133.46 EUR from 134.26 last week, after rising to 133.30, the highest level since June 25th. The currency also rose to 95.39 per Dollar from 96.04. The JPY gained versus all of the 16 most-active currencies as Asian stocks declined, prompting investors to cut holdings of higher-yielding assets.

However, the JPY's gains may be curbed after North Korea test fired its short-range missiles on July 4th, spurring condemnations from the U.S., South Korea and Japan. Analyst said that as long as North Korea is launching short-range missiles that can't reach the territory of Japan, this geopolitical news which often weighs on the Yen, will not affect the price action. Traders said that the key for the financial market is positioning ahead of the G8 summit. The U.S Dollar may come under further weakness this week, and this could support the Yen a little bit higher as well.