The dollar edged up against major currencies on Tuesday, but kept to tight ranges versus the euro ahead of an expected Federal Reserve rate hike and a meeting of Group of Seven industrialised nations later in the week. The yen lost some ground on waning expectations for a revaluation of the Chinese yuan after a G7 source told Reuters on Monday the meeting is not looking for an abrupt change in China's currency policy.
"Positions are square now and people are sitting back and waiting for the events later this week," said Paul Mackel, currency strategist at ABN Amro in London.
"The China comments affected the yen but in general there is more trading in crosses than euro/dollar."
At 1300 GMT, the dollar fetched 103.74 yen, up 0.1 percent from late US trade on Monday. The euro was also up 0.1 percent at 135.20 yen.
The greenback was little changed against the euro at $1.3032 but rose half a percent against the Australian dollar, which was reeling from worse-than-expected trade data.
The market paid little attention to news that eurozone manufacturing activity grew in January at its fastest pace in three months as global demand raised exports.
A survey for the NTC Research Eurozone PMI showed a rise for the second month running to 51.9 from 51.4 in December. That pulled the index further above the 50 level that divides growth from contraction and beat the consensus forecast of 51.7.
Sterling was jolted slightly lower against the dollar and euro by weaker-than-expected British manufacturing data.
The Fed is widely expected to decide on another quarter percentage point hike in the fed funds rate on Wednesday.
But traders will be looking for any signs that the central bank could accelerate its campaign of "measured" monetary tightening in coming months.
Also on Wednesday, investors will watch US President George W. Bush's State of the Union speech for any outline of steps to curb a large and growing budget deficit.
The Group of Seven economic powers does not expect China to announce any change to its currency regime at this week's talks in London and is not looking for an abrupt change in policy, a European G7 source said late on Monday.