TOKYO: The dollar traded in a tight range on Wednesday in Asia, as weak US data hit sentiment and after investors locked-in profits following the Bank of Japan's surprise stimulus expansion last week.
In Tokyo midday trading, the greenback was nearly flat at 113.65 yen, against 113.63 yen in New York Tuesday.
The euro strengthened to $1.2555 and 142.70 yen, from $1.2545 and 142.55 yen in US trade, despite the European Commission slashing its growth outlook for this year.
The dollar/yen rate "may be experiencing a light adjustment after testing its upside," said Akira Moroga, manager of forex products group at Aozora Bank.
Osamu Takashima, chief FX strategist at Citigroup Global Markets Japan, added that the dollar was likely to continue its upward momentum against the yen.
"But it wouldn't be a surprise if the pair continues to remain top heavy for the next few sessions," he told Dow Jones Newswires.
The yen -- hit by Friday's BoJ announcement to expand its huge stimulus to 80 trillion yen annually -- on Monday sank past 114 against the dollar, a level last seen in 2007.
Weighing on sentiment, the US Commerce Department said Tuesday that new orders for manufactured goods fell and the trade deficit widened.
Analysts also said last week's initial estimate of growth in the third quarter, which came in at 3.5 percent, was likely overstated by as much as 0.4 percentage points, and that the current quarter would be slower.
Also Tuesday, the European Commission cut its eurozone 2014 growth forecast to 0.8 percent from 1.2 percent, and its 2015 estimate to 1.1 percent from 1.7 percent.
Traders would now turn their focus to the European Central Bank's policy meeting later this week, with analysts looking for some guidance on its plans for kickstarting the economy.
"Downward revision of eurozone growth forecast for 2014 and 2015 by the European Commission and the uncertainty over the US Mid-term elections prevented investors from taking on risk," Credit Agricole said.
But "unless eurozone growth momentum slows considerably further, there does not appear to be much room of further rising ECB easing expectations, especially when it comes to more aggressive policy measures such as quantitative easing".
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