The yen edged higher in early Asian trade on Thursday as currency dealers focused on the Bank of Japan's policy meeting for signs of fresh monetary easing.
The dollar slipped to 84.19 yen in morning Tokyo trade, from 84.39 yen in New York late Wednesday, while the euro also edged down to 111.24 yen from 111.59 yen. The euro fetched $1.3215, slipping from $1.3226.
Most market watchers are expecting the BoJ to expand its 91 trillion yen asset-purchase programme -- its main policy tool -- as it faces increasing political pressure to spur the world's third-largest economy.
The yen tumbled to multi-month lows after Japan's conservative opposition swept to victory in national elections Sunday, pledging to boost spending and pressure the BoJ for aggressive policy action.
Shinzo Abe, head of the victorious Liberal Democratic Party, have criticised Japan's central bank for not doing more to stoke the economy, which may have slipped into recession in the third quarter.
The BoJ held off fresh easing measures last month, stoking speculation it would move after wrapping its last scheduled meeting of the year on Thursday.
But "the outcome of a single BoJ meeting is becoming less of a driver for the dollar/yen's direction", Masafumi Yamamoto, chief forex strategist at Barclays Bank in Tokyo, told Dow Jones Newswires.
Some dealers expect the BoJ to hold off any more measures until January.
The euro was given a measure of support from a closely watched German report that showed business confidence climbing further in December, while the dollar faced pressure after weaker-than-expected US housing data.
The greenback is also coming under pressure owing to the lack of movement in US fiscal cliff talks.
Deeply divided US lawmakers are embroiled in negotiations over the package of tax hikes and spending cuts that will likely push the world's biggest economy into recession if they come into effect on January 1.
"But optimism that the shape of a deal will be announced before Christmas evidently still runs quite high," National Australia Bank said in a note.