In U.S. trading on Monday, USD/JPY was trading at 96.93, down 0.55%, up from a session low of 96.82 and off a high of 97.34.
The pair was likely to find support at 96.94, Thursday's low, and resistance at 98.72, Tuesday's high.
An ongoing impasse among U.S. lawmakers and the White House over terms needed to create a spending package and reopen the government sent investors avoiding the dollar on Monday.
Markets were also growing increasingly worried that the deadlock will affect negotiations to raise the U.S. debt ceiling, which the U.S. Treasury Department has estimated will be reached by Oct. 17, after which the risk of default rises.
Republican House Speaker John Boehner said Sunday the House will not support bills to fully reopen the government or increase the government debt ceiling unless the Obama administration agrees to talks aimed at reducing the deficit.
A U.S. default could roil markets and slow U.S. recovery by further eroding confidence in Washington's ability to craft economic policy,
The yen, meanwhile, saw safe-haven demand in a session absent of U.S. economic indicators due to the government shutdown.
The yen was up against the pound and up against the euro, withGBP/JPY down 0.05% and trading at 155.95 and EUR/JPY trading down 0.40% at 131.58.
Earlier in the euro zone, data revealed that the economy grew by 0.3% in the second quarter, unchanged from a preliminary estimate and in line with forecasts.
A separate report showed that the Sentix index of euro zone investor confidence dropped to 6.1 in October from 6.5 in September as concerns over the political impasse in the U.S. hurt sentiment.
Analysts had expected the index to rise to 10.6 this month.
On Tuesday in the euro zone, Germany is to release data on the trade balance and factory orders.
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