TOKYO: The dollar's strong rally against the yen ran out of steam in Asia Tuesday, after fresh figures showed pending US home sales slowed for the fifth straight month in October.
The greenback bought 101.43 yen in Tokyo morning trade, down from 101.51 yen in New York and a six-month high around 101.90 yen in Asia Monday.
The euro rose to $1.3536 from $1.3524 while it bought 137.23 yen from 137.28 yen. The single currency was close to a four-year high of 138 yen in Tokyo Monday.
The dollar was rallied in Asia Monday after United States and five other major powers struck a deal with Iran that will see Tehran curtail its nuclear programme in exchange for a limited easing of international sanctions.
However, the US unit dipped in New York after the soft housing data from the National Association of Realtors.
Investors are now waiting for the release of figures in consumer confidence and durable goods orders later in the week, while they will also be keeping tabs on sales during the post-Thanksgiving Black Friday, the busiest shopping day of the year in the United States.
"The dollar's further upside will require improvements in the US economic sentiment, which may be signalled through economic indicators and sales during the Christmas shopping season," said Mitsushige Akino, fund manager at Ichiyoshi Asset Management.
Investors usually move out of the yen, which is considered a safe bet, and into "higher risk" currencies such as the euro when they feel confident in the economic outlook.
A slowdown in Japan's third-quarter economic growth has stoked speculation of further easing measures from the Bank of Japan (BoJ), weighing on demand for the yen.
Investors will also be focusing on eurozone inflation data this week after data this month showed prices increased at their slowest pace in four years in October, raising the spectre of deflation and prompting the European Central Bank (ECB) to cut interest rates to a record low of 0.25 percent.
"The main takeaway from recent speeches is that the ECB stands ready to do whatever it takes to avoid deflation, so that the easing bias will remain," Credit Agricole said.
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