Tokyo - The dollar slipped on Wednesday after a rally fuelled by upbeat US data, including a pick-up in consumer prices, that boosted the case for an early Fed interest rate hike.
In Tokyo, the greenback weakened to 119.61 yen, against 119.77 yen in New York.
The euro rose to $1.0936 and 130.79 yen, from $1.0919 and 130.78 yen in US trade.
“Traders love a good pullback and as soon as the dollar looks like it's setting up to resume its bullish trend currency traders will flood the market with trades,” Scott Schuberg, chief executive officer of Rivkin Securities in Sydney, told Bloomberg News.
“We could see continued volatility in foreign-exchange markets.”
US data on Tuesday showed sales of new single-family homes surged in February to a seven-year high, while consumer prices rose for the first time in four months.
The upbeat figures strengthened the case for the US central bank to raise rates in the coming months, which would be a plus for the dollar.
Demand for the greenback had stalled in Asia on Tuesday after the Fed's vice-chairman suggested interest rates would rise more slowly than expected.
Investors are tracking a slate of speeches by Fed officials this week for clues about the timing of the long-awaited rate rise, which many had expected as early as June.
The euro won support from a key survey Tuesday that showed eurozone business activity hit a near four-year high in March as the 19-country currency area's modest economic activity continued, despite concerns over the Greek debt crisis.
The closely watched Markit Economics report Composite Purchasing Managers Output Index rose to 54.1 points from 53.3 in February, putting it well above the 50-point mark that shows growth.
AFP