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Dollar mixed ahead of Fed policy meeting

The dollar was mixed in Asian trade on Tuesday ahead of a US Federal Reserve policy meeting and on the back of weak home sales data, while the yen halted its steep slide.

The dollar weakened to 90.73 yen in Tokyo, against 90.82 yen in New York on Monday, with the euro also easing to 122.06 yen from 122.20 yen and to $1.3448 from $1.3454.

However, Citibank Japan chief forex strategist Osamu Takashima said the yen's gains may just be a temporary deviation, adding: "We suspect (the yen) should have some room to depreciate further, with the upper limit at the 95 level" against the dollar.

The Fed goes into the two-day meeting on Tuesday a week after Japan's central bank unveiled fresh monetary easing measures that have weakened the yen.

The US bank said last year it would not tighten policy until the jobless rate fell to 6.5 percent. Friday will see the release of official jobs data, with unemployment currently at 7.8 percent.

The euro took a breather after reaching multi-month highs against the dollar and yen as the European Central Bank said 278 eurozone banks would repay 137 billion euros of ultra-cheap loans early.

That buoyed hopes that the bloc's financial sector was on a firmer footing, but data on Monday showed bank lending to private households in the eurozone contracted as the sovereign debt crisis took a bite out of credit demand.

A war of words continued over the yen's slide since a new conservative government swept national elections last month, pledging to pressure the Bank of Japan for aggressive easing, which tends to weaken the unit.

The move stoked criticism overseas -- including from German Chancellor Angela Merkel and Angel Gurria, head of the Organisation for Economic Cooperation and Development (OECD) -- about Tokyo's exchange rate policy.

It also sparked warnings of a global currency war, although Japanese officials including Finance Minister Taro Aso have steadfastly denied claims Tokyo orchestrated the unit's tumble.

On Tuesday Japan's economic revitalisation minister Akira Amari said the currency's slide was a product of Tokyo trying to boost the deflation-plagued economy.

"I think it is understood that what's happening now is... a result of our actions to emerge from the current situation, where Japan is failing to fulfill its duty to play a leading role in the world economy," he was quoted as saying by Dow Jones Newswires.

The dollar was mostly higher against other Asia-Pacific currencies, rising to 1,085.95 South Korean won from 1,083.77 won Monday and to Tw$29.60 from Tw$29.39.

It also gained to 53.91 Indian rupees from 53.79 rupees and to 40.74 Philippine pesos from 40.70 pesos.

The greenback fell to 9,778 Indonesian rupiah from 9,788 rupiah, while staying unchanged at Sg$1.2361.

The Australian dollar firmed to $1.0443 from $1.0414, while China's yuan eased to 14.56 yen from 14.60 yen.