The yen gained ground in late Asian trade Tuesday after the Bank of Japan held off new easing measures, as traders look ahead to the central bank's next policy meeting for signs of fresh stimulus.
The dollar bought 81.20 yen while the euro fetched 103.96 yen, against 81.40 yen and 103.99 yen in New York trade Monday.
The central bank on Tuesday held steady on any new measures and kept rates unchanged, but a statement, which warned over Japan's slowing economy, hinted at fresh action at its next meeting, said Mizuho Securities chief market economist Yasunari Ueno.
"It raised speculation for a further expansion of the asset purchase programme (in December)," Ueno said.
In October, the BoJ said it would expand an asset-purchase programme -- its main policy tool -- by 11 trillion yen ($135 billion) to 91 trillion yen in a bid to kickstart growth as recovery from last year's quake-tsunami disaster.
The BoJ's decision on Tuesday came days after the frontrunner to become Japan's next prime minister vowed aggressive monetary easing to fix the nation's economic woes, ahead of general elections next month.
Shinzo Abe, head of the conservative opposition Liberal Democratic Party, has been widely tipped to unseat Prime Minister Yoshihiko Noda in the December 16 polls.
Against the dollar Tuesday, the euro was stronger at $1.2782, from $1.2778 in New York, where the unit had dipped on news that Moody's ratings agency had cut France's gold-plated AAA credit grade on the eve of a crucial eurozone meeting.
"(It) could suggest countries like Spain may be its next target," Kengo Suzuki, forex strategist at Mizuho Securities, told Dow Jones Newswires.
The euro won some support as the bloc's finance ministers said they will reach a tentative agreement at their meeting Tuesday to distribute a bailout to Greece so it avoids a messy default.
The dollar was mixed against other Asia-Pacific currencies.
It fell to 54.87 Indian rupees from 55.06 rupees on Monday, to Tw$29.10 from Tw$29.15 and to 30.69 Thai baht from 30.72 baht.
The greenback also slipped to 1,082.00 South Korean won from 1,086.30 won, to Sg$1.2234 from Sg$1.2248 and to 41.13 Philippine pesos from 41.24 pesos, but it gained to 9,634 Indonesian rupiah from 9,632 rupiah.
The Australian dollar rose to $1.0414 from $1.0367, and China's yuan was at 13.05 yen against 12.99 yen.