In the New York foreign-exchange market, the dollar index edged lower, while European fiscal risks at times pushed the euro sharply lower. The euro remained near its high, but gains were capped.
In the New York foreign-exchange market, the dollar index edged down 0.08% from the previous day to 102.17. As selling of European government bonds paused, euro buying and dollar selling gained a slight upper hand.
Dollar-yen fell 0.12% to ¥157.88, while the euro rose 0.08% against the dollar to $1.1204. The Bank of Japan's regional economic report indicated concern about inflation, leaving a sense of caution in the yen market.
The euro at one point fell to $1.1171 during trading, but buying returned as the rise in European government-bond yields paused. Expectations of a Fed rate hike have receded, while the probability of a hike at the December meeting is priced in.
Market participants pointed out that fiscal risks are driving the euro's moves. Fiscal concerns in France and Italy are weighing on the euro, and the currency market is expected to remain uncertain even after an ECB rate hike.