The dollar traded in a narrow range on Monday, keeping gains made on robust US growth data as investors moved cautiously ahead of the Federal Reserve's decision on interest rates.
The dollar had advanced on Friday after data showed the US economy grew a better-than-expected 3.8 percent in the third quarter, supporting expectations that the Fed will keep raising rates. The dollar's growing yield advantage over the euro and the yen has been key to its rally this year.
"It is hard for investors to sell the dollar ahead of the FOMC meeting," said a trader at a Japanese trust bank.
With the Federal Open Market Committee widely expected to raise its key rate to 4 percent on Tuesday from the current 3.75 percent, the market's focus was on what the post-meeting statement has to say about inflation risks.
If the wording suggests the central bank was more worried about inflation, investors would buy the dollar on views the Fed would keep raising rates, the trader said.
Investors were also waiting on the Bank of Japan's semi-annual report on the economy and prices, due at 0600 GMT.
The report is expected to reflect central bankers' views that core consumer prices in Japan will rise steadily next year and allow the BoJ to scrap its ultra-easy monetary policy.
However, few in the market expect the report to alter the yen's recent downward trend given that the BoJ is unlikely to indicate a time for when it might start raising rates.
Earlier in the day, the BoJ said it would keep rates unchanged near zero percent at the end of a one-day Policy Board meeting.
The dollar was buying around 115.65 yen, little changed from Friday, when it rose 0.2 percent.
The US currency got a lift on Friday on news that only Lewis Libby, Vice President Dick Cheney's chief of staff, had been indicted in a grand jury probe into the leak of a covert CIA agent's identity.
Meanwhile, speculators continued to shun the yen, with the number of net short yen positions rising to the highest level in 6-1/2 years last week, according to IMM data.
The euro was also little changed around $1.2060 and 139.45 yen - not far from a six-month high of 140.20 yen hit last week. The euro had fallen 0.6 percent against the dollar on Friday.
Traders were looking to a European Central Bank meeting on Thursday given a growing market view the ECB could raise rates by early next year following a run of upbeat economic data and top ECB officials' concerns about inflation.
Although the ECB is not expected to raise rates this week, the market was interested in what President Jean-Claude Trichet had to say in his post-meeting news conference.
"Trichet's comments may be more hawkish. If they are, the market could further price in expectations for higher interest rates in the euro zone," said Tohru Sasaki, chief forex strategist at J.P. Morgan Chase in Tokyo.
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