The euro stood at $1.3773 in Tokyo trade, slightly down from $1.3788 late Wednesday in New York, where it breached $1.38 at one point.

The European single unit eased to 106.16 yen from 106.52 yen weighed by profit-taking and selling from Japanese exporters.

The dollar inched down to 77.05 yen from 77.24 yen.

"The market had been extremely pessimistic since late September but the mood has somewhat changed as a path to a solution to the European problem is looming," said a senior dealer at a major Japanese bank.

"The euro took a breather in Tokyo trading hours," the dealer said.

The single currency climbed on Wednesday after European Commission president Jose Manuel Barroso said European banks "urgently" need to recapitalise to weather the sovereign debt storm.

Also providing support was news that a plan to enhance the eurozone rescue fund is expected to be approved by Slovakia. All the other 16 eurozone members have already ratified it.

A day after lawmakers in Bratislava blocked an expansion of the European Financial Stability Facility (EFSF), political parties agreed Wednesday to hold a new vote, which they said would see it approved by Friday.

A yes vote will pave the way for the EFSF, a tool created last year after debt-riddled Greece took a bailout from the European Union, to be put into effect.

A stronger-than-expected Australian employment report sent the Australian dollar higher.

The Australian Bureau of Statistics said the country's unemployment rate dipped to 5.2 percent in September, from 5.3 percent in August.

The "Aussie" surged, touching a high of 102.30 US cents from 101.50 just before the report was released. It stood at 101.76 in early afternoon trade.