Against the U.S. dollar, the yen added more than 0.3 per cent to 142.31, and sat not too far from a four-month high of 140.95 reached last week

The yen rose broadly on Tuesday ahead of a policy decision from the BoJ later in the day which some traders hope will prove crucial in determining if and when the central bank will move away from negative interest rates.

Expectations are for the Bank of Japan to maintain its ultra-loose monetary policy at the conclusion of its two-day meeting.

Still, investors will be parsing the outcome for clues as to how soon the central bank could end a policy that is an exception among major economies, especially as comments from Governor Kazuo Ueda this month stoked speculation of an impending policy shift.

Against the U.S. dollar, the yen added more than 0.3 per cent to 142.31, and sat not too far from a four-month high of 140.95 reached last week.

The Japanese currency has gained more than 6 per cent since it reached a year low of 151.92 in November, in part because of a broadly weaker dollar and expectations that Japan’s ultra-low rates could be nearing an end.

The euro declined 0.26 per cent to 155.67 yen, while overnight volatility in the yen was last at 29.655 per cent, after having climbed to its highest since July on Monday.

While steady BOJ policy may be on the cards for this week, the meeting may still be instrumental, said Jane Foley, senior FX strategist at Rabobank.

In recent months, the commentary from some BOJ officials indicates a cautious, but tangible, increase in confidence that the conditions that would sustain a virtuous cycle of wage inflation, higher consumer demand and profitability are building, Foley said.

That said, it is also very clear from the remarks of BOJ officials that the bank is in no rush to remove stimulus, Foley added.

Meanwhile, the dollar stood near roughly five-month lows against the Australian and New Zealand dollars, as the risk-sensitive currencies got a leg up on the prospect that the U.S. Fed could begin cutting interest rates early next year.

The Aussie rose 0.02 per cent to $0.6708, having peaked at $0.6736 in the earlier session, its highest since July 31.

The kiwi added 0.1 per cent to $0.6218, standing not too far from Monday’s high of $0.6250.

Sterling gained 0.07 per cent to $1.2656, while the euro shed 0.01 per cent to $1.0921.