[TOKYO] The US dollar inched up against the yen and kept broad gains against other major peers early on Tuesday, after rebounding sharply overnight on comments by Federal Reserve Janet Yellen suggesting US interest rates could be raised quickly this year.

The US dollar's rise, however, was tempered as traders were cautious ahead of US President-elect Donald Trump's inauguration on Friday.

It added 0.1 per cent to 114.760 yen. The US currency rallied nearly 2 per cent the previous day, when it pulled ahead from a seven-week low of 112.570 and snapped a seven-day losing streak.

The pound, which had jumped 3 per cent on Tuesday to vault above US$1.2400 following British Prime Minister Theresa May's Brexit speech, lost more than one per cent overnight and last traded at US$1.2265.

The euro was little changed at US$1.0628 after falling 0.8 per cent the previous day.

The US dollar was given a lift as US debt yields pulled away from seven-week troughs and rose after Ms Yellen said Wednesday that "waiting too long to begin moving toward the neutral rate could risk a nasty surprise down the road - either too much inflation, financial instability, or both."

"Yellen's comments were not particularly new, but it helped participants buy back the dollar which had sunk low along with Treasury yields," said Shin Kadota, senior forex strategist at Barclays.

"But the dollar is making less headway from these levels with Trump's inauguration looming. The Fed is poised to hike rates successively, but monetary policy would also depend to a large degree on Trump's policy specifics."

The Australian dollar was up a fraction at US$0.7512 after sliding 0.8 per cent the previous day.

The US dollar's broad bounce has knocked the Aussie away from a two-month peak of US$0.7569 reached on Tuesday.

The New Zealand dollar was flat at US$0.7126 after dropping 1.2 per cent overnight. The kiwi had touched a one-month peak of US$0.7219 on Tuesday.

REUTERS