The dollar held gains on Tuesday as markets awaited signals, expected later this week, about the potential timing of rate cuts by the Federal Reserve.
The yen trimmed losses from a day earlier when worse-than-expected Japanese economic data stirred expectations that the government would ramp up stimulus. The Aussie dollar edged lower after minutes from the Reserve Bank of Australia showed policymakers were in no rush to raise rates.
Trading was thin with many markets in Asia closed for the Lunar New Year holiday and following the President's Day holiday in the US Key economic events lie later in the week, with minutes from the Fed's last meeting and advance figures on US gross domestic product.
"We're quite positive on the US economy," said Kristina Clifton, senior currency strategist at Commonwealth Bank of Australia in Sydney. "The market is currently pricing a high chance of a June interest rate cut, which is also our view. However, we differ from the market in that we expect a follow-up cut in July."
"We judge that the most important driver of the dollar through 2026 will be the narrative of US exceptionalism," she added.
The dollar index , which measures the greenback against a basket of currencies, inched up to 97.12 after a 0.2 percent gain in the previous session. The euro slid 0.1 percent to $1.184.
The yen strengthened 0.3 percent to 153.04 per dollar. Sterling weakened 0.11 percent to $1.3607.
Data on Friday showed US consumer prices increased less than expected in January, giving the Fed additional leeway for policy easing this year. Money market traders are pricing about 59 basis points of easing for the rest of this year.
The Fed's Open Market Committee issues minutes from its January meeting on Wednesday. Other key data points this week include inflation readings for Britain, Canada and Japan, as well as preliminary readings of global business activity on Friday.
A recent rally in the yen stalled on Monday when official figures showed Japan's economy barely grew last quarter. Japan's currency remains about 4 percent weaker against the dollar since fiscal dove Sanae Takaichi became prime minister last year.
Money flowing into Japan's ebullient stock market along with expected rate hikes by the Bank of Japan are starting to turn the tide on yen weakness, said Bart Wakabayashi, the Tokyo branch manager at State Street.
"Investments continue to come into Japan and it's looking good," he said. "Real money investors have been reducing their overweight in dollar-yen, so buying the yen and selling the dollar."
