The U.S. dollar retreated against major currencies on Monday after scoring major gains on improved U. S. consumer confidence in the previous session.

The Japanese yen rebounded from the lowest level in 4.5 years against the dollar on Monday after Japan's state minister for economic revitalization, Akira Amari, said that the currency's further weakness could harm the Japanese economy, indicating that the yen may have depreciated too fast recently.

Following a report that the U.S. consumer sentiment index, jointly released by Thomson Reuters and the University of Michigan, reached the highest level in nearly six years, the dollar broke through the level of 103 against the yen last Friday.

The Bank of Japan will begin a two-day policy meeting on Tuesday. The central bank is expected to maintain its current policy. It announced on April 4 a plan to purchase 1.4 trillion dollars of assets in the next two years to fight the two-decade- long deflation.

Moreover, investors are closely watching U.S. Federal Reserve Chairman Ben Bernanke's scheduled testimony before Congress on the U.S. economic outlook on Wednesday, which may give some hints about the Fed's exit strategy from its massive bond-purchasing program.

On the economic front, the Chicago Fed National Activity Index dropped to minus 0.53 in April from minus 0.23 in March, mainly due to declines in production-related indicators.

In late New York trading on Monday, the euro rose to 1.2897 dollars from 1.2828 in the previous session, and the British pound climbed to 1.5269 dollars from 1.5157. The Australian dollar rose to 0.9818 dollars from 0.9734.

The dollar bought 102.27 Japanese yen, as against 103.22 in the previous session. It also edged down to 0.9662 Swiss francs from 0. 9731, and fell to 1.0228 Canadian dollars from 1.0285.

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