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[TOKYO] The US dollar inched up against the yen on Tuesday while the euro held to modest gains against the greenback, as the market looked to emerge out of the holiday lull and into the last trading stretch of the year.
The euro was flat at US$1.0453 after adding 0.2 per cent overnight.
The US dollar was up 0.1 per cent at 117.230 yen after spending the previous day stuck in a narrow 117.005-117.390 range as many major financial markets were closed for the Christmas holidays.
The yen showed little reaction to Japan's inflation data, which saw core consumer prices mark the ninth straight month of annual declines in November.
The US currency had climbed to a 10-month high of 118.660 yen mid-month on the back of the Trump rally, during which it benefited from expectations of higher interest rates to match the incoming president's stimulatory economic policies.
But gravity has caught up with the US dollar, which surged more than 10 per cent against the yen since Mr Trump's US election win in November.
Some in the market now expect a deeper downward correction to grip the greenback, with the rise in US debt yields slowing and concerns over Mr Trump's protectionist statements taking some shine off the US dollar.
"Trump's policies are understood to be conducive to inflation and a stronger currency. But a higher dollar would be a significant setback to the US economy seemingly in the ending stages of an expansion," wrote Makoto Noji, senior strategist at SMBC Nikko Securities.
"Therefore, the Trump administration and the Federal Reserve would have to stick to a cautious monetary policy stance to prevent the dollar from appreciating excessively. We thus expect a very gradual downtrend for dollar/yen."
The US dollar index was little changed at 102.970, having pulled back over the last few days from a 14-year high of 103.650 marked a week ago.
The Australian dollar was down 0.2 per cent at US$0.7181 , inching back towards a seven-month low of US$0.7160 plumbed late last week on concerns over China's economic growth.
The New Zealand dollar was also down 0.2 per cent, at US$0.6882 , paring the gains made the previous day.