The euro gained ground in Asia Thursday on optimism a long-sought bailout deal for Greece will be found, while the yen was mixed amid speculation of further easing measures from the Bank of Japan.
In Tokyo the European single currency fetched $1.2846, up from $1.2826 in New York late Wednesday, while it bought 105.96 yen against 105.84 yen.
The dollar retreated from gains in early Asian trade to buy 82.48 yen against 82.51 yen.
The euro has won support after European leaders insisted Wednesday that their third attempt in as many weeks to unblock bailout funds for debt-stricken Greece will likely succeed, as Athens warned that eurozone stability depended on it.
The yen, meanwhile, has been under pressure since Japan's main opposition leader Shinzo Abe, widely tipped to become prime minister after elections next month, said he would press the Bank of Japan for aggressive monetary easing to boost the economy.
Abe's comments have heaped further pressure for action by the BoJ, which held steady on launching fresh easing measures after a policy meeting this week.
But the bank's remarks about Japan's weakening economy and a string of poor economic data has sparked speculation it will launch new stimulus after its December meeting. Easing tends to weigh on the currency.
Traders also reacted to a mixed bag of US economic data, while awaiting a deal in Washington on avoiding the fiscal cliff of spending cuts and tax hikes that come into effect on January 1 and will likely tip the economy into recession.
Despite signs from US lawmakers that a new deal may be within reach, the dollar's recent advances against the yen could be wiped out unless a concrete remedy is found soon, dealers said.
"Specific and speedy progress is necessary to further lower uncertainty," Masafumi Yamamoto, chief forex strategist at Barclays in Tokyo, told Dow Jones Newswires.
"If that can't be seen, this could weigh on the dollar against the yen."