By Ira Iosebashvili and Hiroyuki Kachi 
 

The dollar hit its highest level in two weeks against the yen Monday after a larger-than-expected jump in Japan's trade deficit led investors to sell the currency.

The U.S. dollar recently traded at 102.61 yen, up 0.2% from a close of Y102.43 in late Friday trading. It was the highest level for the dollar against the yen since April 8.

Markets were thin, with London closed for the Easter holiday.

Japan's Ministry of Finance released data Monday morning showing a trade deficit of Y1.45 trillion in March, the largest ever for the month and marking a record 21 straight months of shortfalls. That was much worse than the median forecast for Y1.07 trillion deficit in a survey of economists by The Wall Street Journal and Nikkei. A trade deficit would suggest the supply of yen in the economy is outpacing demand.

The data suggested that Japanese officials may need to boost the economy by easing monetary policy further, a move that would weigh on the yen, said Omer Esiner, chief market strategist at Commonwealth Foreign Exchange. Aggressive monetary stimulus by Japan's central bank has already helped drive Japan's yen down roughly 20% since late 2012.

"It's becoming clearer that Japanese policy makers may need to act. That makes the yen vulnerable to more weakness in the near term," Mr. Esiner said.

The euro traded at $1.3792, down 0.1%. It was stronger by 0.1% against the yen, to $141.55.

Write to Ira Iosebashvili at ira.iosebashvili@wsj.com