The dollar held steady against the yen on Monday, taking a breather after last week's rally and as it treads cautiously amid lingering concerns over a US-China trade spat.

The dollar last traded at 106.30 yen, after having risen more than 1.5 per cent last week for its biggest weekly gain since September 2017.

The US currency had risen against the yen last week, helped by signs China and the United States were working behind the scenes to avoid a full-blown trade war, and hopes for a diplomatic breakthrough over North Korea's nuclear programme. The resulting uptick in risk appetite weighed on the safe-haven yen, a currency that tends to rise during times of market turmoil and vice versa.

Given the simmering US-China trade tensions, however, some analysts say the dollar's gains against the yen may be limited in the near term.

China has slapped extra tariffs of up to 25 per cent on 128 US products including frozen pork, as well as on wine and certain fruits and nuts, in response to US duties on imports of aluminium and steel, China's finance ministry said. The tariffs, to take effect on Monday, matches a list of potential tariffs on up to $3 billion in US goods published by China on March 23.

Markets haven't shown much reaction to China's announcement so far, partly because Beijing had already warned of such measures, said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore. “However, if Chinese equities were to fall on this factor, we could see a general risk-off move,” Okagawa said.

Analysts say another focus is the potential for foreign investment by Japanese institutional investors at the start of Japan's new financial year.

Sumitomo Mitsui Banking Corporation's Okagawa said Japanese investors will probably increase their allocation to overseas assets, at least to some extent, which will support the dollar. “Still, it's probably going too far to say that the dollar will head up towards 110 yen in April because of such fresh buying,” Okagawa added.

Against a basket of six major peers, the dollar last stood at 89.967, having backed off from a one-week high of 90.178 set last Thursday. The euro held steady at $1.2321.

Although expectations of an exit from the ECB's stimulus had boosted the euro since last year, the common currency has been in a holding pattern since hitting a three-year high of $1.2556 on Feb. 16, with its March 1 low of $1.21545 seen as an immediate support level.

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