Forecasts about price swings in Yen against the euro are becoming stronger as investors bet that Bank of Japan (BoJ) will also make dovish rhetoric to match European Central Bank (ECB).

For the last six weeks, Japan's currency Yen is strengthening against the euro and rose over eight percent so far this year. Traders and market analysts predict that Bank of Japan being under pressure to check gains in Yen may resort to keep interest rates at lower level on lines of European Central Bank.

Japan's monetary stimulus was at record level in October. Japan's Central Bank will be holding its one-day policy meeting on 30 October. According to Mario Draghi, President, European Central Bank, ECB would announce additional stimulus in December. 

The Asian stocks soared on Monday and this checked US dollar's gaining streak. The US dollar was gaining for 10 months against major currencies. The retreat of dollar gain has also strengthened Australian and New Zealand currencies.

Ray Attrill, co-head of currency strategy at National Australia Bank Ltd in Sydney, said: " There's a lot more euro-yen risk. The ECB has upped the ante on the BOJ to act sooner, partly out of fear of a much weaker euro-yen rate if they don't act/ It's a line-ball call whether they do something this week."

Earlier, the ECB's stimulus plan, the US dollar turned flat against the euro. The expectations that US Federal Reserve will wait until next year to take a decision on interest rate have resulted in downturn movement of the US dollar. 

The US dollar has weakened after the disappointing data and after indications from the US Fed that it would wait before taking a decision. Subsequently, the suggestion from ECB on the expansion of the economic stimulus program has also further weakened euro prompting Japan's Yen to rise against it.

The Japanese currency grew 0.1 percent to 133.65 against euro in addition to its 1.3 percent gain during the last week. The implied volatility of euro-yen rose to 13 percent indicating the highest level since 11 September.

The delay in US Fed's decision on interest rate pushed the US dollar downwards and as a result, euro and Japan's Yen rose against the greenback. Generally, investors consider Japanese currency as a safe-haven asset in the volatile forex markets, more particularly during the times of geopolitical or financial instability. 

There's gradual drop in bets made by Hedge funds and other money managers on the Yen versus the dollar. The number contracts on yen-euro declined to 3,639 during the last week from 13,832 in the previous week, according to the data by Commodity Futures Trading Commission in Washington.