The dollar hit a three-month high against the yen on Monday, benefiting from develoments in Afghanistan and expectations for further gains on Wall Street. "Conditions for the dollar have improved, with a more friendly stock market environment suggesting that risk appetitte is returning," said Ian Stannard, currency strategist at BNP Paribas. The yen was also weighed down by increasing concerns about the Japanese banking sector ahead of their earning reports due this week. Dealers said yen bears took the advantage of thin trading conditions ahead of U.S. Thanksgiving holiday to push it to fresh lows. The dollar rose to a high of 123.42 yen by 1003 GMT, up a third of a percent on the day. Dealers said a convincing break of 123.50 would open the way to next key resistance at 125 then to 126.82, this year's high hit in April. But they added short-term indicators showed the dollar is overbought with a 14-day relative strength index at 75, meaning retracement or consolidation would be no surprise.