The no change decision and a hawkish accompanying statement were widely anticipated, so the foreign exchange's focus was shifting to Japan, with international ratings agency Fitch IBCA to announce a review of Japan's credit rating at 0800 GMT.

"It was almost inevitable that they had to maintain the tightening bias because of what was happening in the economy, and the way the market has taken it shows it was not a big surprise," said Jeremy Hawkins, senior economic adviser at Bank of America.

"The May employment report triggered the selloff in the dollar so people will be keeping a close eye on the (June) report next week," he added. Hawkins said in the meantime, the near-term focus would be on the Fitch statement.

The dollar has lost nearly four percent against the yen since early June and at its weakest had lost more than four percent against the euro since the beginning of the month.

It was trading around 105 yen, near the week's low of 104.82 hit in Tokyo, and $0.9420 at 0700 GMT.

The markets were concentrating on the possibility of an end to the Bank of Japan's near-zero rate policy, which boosted the yen in Tokyo.

Speculation about Japanese interest rates was heightened by a front page report in the Asahi Shimbun newspaper saying the Bank of Japan could tighten as early as its July 17 meeting, a scenario increasingly favoured by the market in recent weeks.

"The report really said nothing new, but it said it on the front page of a mass daily," said a US bank dealer in Tokyo.