NEW YORK: The dollar eased on Wednesday, backing away from a nearly three-week high hit against the yen, as currency traders readied for the release of Federal Reserve meeting minutes.
Coming off two days of gains, the greenback was down 0.25 percent versus the yen but above session lows touched after the Bank of Japan kept monetary policy unchanged despite slowing inflation.
The dollar last stood at 119.9 yen, while the dollar index, which measures the greenback against the yen and five other major currencies, was mostly down and was last nearly unchanged.
The minutes of the Federal Open Market Committee's March 17-18 meeting will be released later on Wednesday. The dollar strengthened for several months, in part due to the performance of the U.S. economy against the rest of the world, and anticipation of tighter U.S. policy.
"The Fed is the only central bank in the world talking about tightening policy; everybody else is talking about easing," said Ron Simpson, director of currency research with Action Economics in Tampa, Florida. "In the bigger picture, the dollar has room to go higher."
Policymakers signalled in a statement after their March meeting that rates might rise later than many investors had anticipated, and some Fed officials have noted that the dollar's rally does affect the economy. If the minutes show any unease from Fed policymakers about the dollar's steep rise, the greenback could dip further.
The greenback was also waning before the start of a U.S. corporate earnings season that could show the negative impact of a strong currency, spreading caution about any rate hike in the world's largest economy.
The dollar declined earlier after Japanese policymakers did not add to easing, as some institutional investors expected.
Governor Haruhiko Kuroda said that because of easing steps taken last October, a slowdown in inflation had not hurt forward inflation expectations, reducing the chances of a further expansion in Japan's asset-buying program in coming months.
As a result, the yen climbed and knocked the dollar from a nearly three-week high of 120.45 yen hit on Tuesday.
Meanwhile, the euro nudged up as high as $1.0887 despite an unexpected drop in German industrial orders in February, before easing 0.20 percent to $1.0796 percent.
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