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Japan's yen took the spotlight in Asia on Monday, weakening to the 150-per-dollar level, but just briefly, as investors betting on a further rise in dollar yields lost out to those expecting Japanese authorities will intervene in markets.

The risk of Israel's war on the Islamist group Hamas becoming a wider regional conflict kept markets on edge, as Israeli air strikes battered Gaza early on Monday, and the United States dispatched more military assets to the region.

U.S. Treasuries were subdued as investors hunkered down for a European Central Bank meeting and U.S. GDP data later in the week.

Ten-year yields were around 4.97%, having briefly popped above 5% last week after Federal Reserve Chair Jerome Powell said the U.S. economy's strength and tight labor markets might warrant tighter financial conditions.

The dollar index added 0.02% to 106.19, with the euro down 0.07% at $1.0586.

The Japanese yen last traded at 149.83 per dollar, after briefly easing early on Monday to 150.14, a level last seen on Oct.3 when traders had suspected the Bank of Japan intervened to nudge it to the stronger side of 150.

Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo, said it seems like a set of investors were betting the Bank of Japan will defend the 150 level, even as others saw rising U.S. yields as a reason to keep pushing the dollar up.

"Potentially there are two camps out fighting around 150, so that's why dollar-yen doesn't move from here," Yamamoto said.

While there was some speculation the BOJ might once again tweak its yield-curve policy band at a scheduled policy review next week, the BOJ had also shown it will not let domestic yields rise sharply, he said.

The benchmark JGB yield was at 0.835%, just below Friday's peak which was the highest since July 2013. Yields dipped on Friday after the BOJ announced more loans to encourage financial institutions to buy JGBs.

Even though it hasn't risen lockstep with yields, the dollar was underpinned by the steady rise in yields at the long end of the U.S. Treasuries curve, driven by widening term premiums on expectations of stronger growth and fiscal slippage.

Since mid-July, the trade-weighted dollar index is up 6.7% but has been nearly steady this month.

"It is a bit of a puzzle that DXY hasn't retested the early October lows, given its strong foundations of high yields backed by strong growth, strong energy production as concerns grow over the Middle East and haven status," said Sean Callow, a currency strategist with Westpac.

"However, DXY downside is likely limited to the mid-105s and we continue to target 109 in Q4/Q1."

Oil prices dipped on Friday after Hamas released two U.S. hostages from Gaza, leading to hopes the crisis could de-escalate without dragging in the rest of the Middle East region and disrupting oil supplies. Brent crude futures were 0.6% lower at $91.55 a barrel, but are still up 10% over 10 days.

The ECB meets on Thursday. Its rate hiking cycle is over, according to all 85 economists polled by Reuters, but it won't be until at least July 2024 before it begins easing as the battle against elevated inflation continues.

The ECB raised its key interest rates by 25 basis points in September, taking the deposit rate to 4.00% and the refinancing rate to 4.50%, but signalled its 10th hike in a 14-month-long streak was likely to be its last.