Expectations that the US Federal Reserve will maintain current rates when it meets this week continued to push the dollar upwards over the weekend.

The euro was trading at $1.25 and the dollar was at 118.83 yen in foreign exchange trading early on Monday, with some predicting it would rise above 120.50 yen this week.

The dollar is on course for its fifth consecutive monthly gain versus the yen, as the odds on lower rates lengthen.

"The Fed statement may reaffirm the US economy is not so bad, with the economy making a soft landing," Toru Tanaka of Mitsubishi told Bloomberg. "The dollar has an upside risk going into the Fed meeting as there's still concern about inflation."

Analysts polled over the weekend were unanimous in predicting an unchanged rate of 5.25 per cent following the Federal Reserve's rate-setting meeting on October 25.