The dollar probed higher against the yen, euro and Swiss franc on Tuesday as investors looked ahead to US data later in the day that could yield further clues on the longevity of US monetary tightening.
The yen slipped back for a second day as investors focused on the outlook for low interest rates in Japan and hunted higher-yielding currencies.
The market was eyeing US housing starts and the producer price index (PPI) due at 1330 GMT for clues about how long the Federal Reserve will keep up its 18-month credit tightening campaign.
The Fed's run of raising overnight rates has fuelled the dollar's rise this year as investors bought into the currency's yield advantage over the euro and the yen.
"Potentially the PPI data is quite interesting as clearly the market has come round to the view that there's only 50 basis points tightening from the Fed before they go on an extensive pause," State Street Global Markets senior market strategist Ryan Shea said.
"If anything there could be potential for some upside risks but obviously that would require higher inflation pressures out of the US"
By 1245 GMT, the dollar was up 0.4 percent at 116.50 yen, having suffered a week-long loss of more than four percent to hit a seven-week low of 115.50 yen on Monday.
The euro was at $1.1961, down 0.3 percent on the day, after a brief spike when the European Commission said it was optimistic about future growth in the eurozone.
The PPI was seen slipping 0.5 percent in November after a rise of 0.7 percent in October. Analysts pinned the expected fall to lower energy costs.
US housing starts was seen holding steady at 2.017 million units in November versus 2.014 million a month earlier.
Unfazed by volatility when the US currency suffered its worst week-long battering in six years, Japanese individual investors had started moving back to the dollar and other high-yielders such as the Australian and New Zealand dollars.
The Australian dollar recovered to 86.05 yen after dipping to 85.71 yen, its lowest since October 17, in early trade.
The kiwi was up on Tuesday, fetching 80.05 yen. The yen has been under broad pressure due to expectations interest rates in Japan would stay near zero in the medium term while other key central banks, especially the Federal Reserve, raise the cost of borrowing to counter inflation.