The dollar index, which tracks the US unit against a basket of six rival currencies, inched down about 0.1 percent to 97.919, well below the two-week high of 99.294 set last week in the wake of the US Federal Reserve's widely anticipated interest rate hike.
The dollar edged down to a fresh two-month low against the yen in very thin Christmas Day trading on Friday, as investors continued to lock in gains ahead of the year-end.
Volume was light, with many countries around the region closed for the Christmas holiday. US and European financial markets will also be closed.
A rebound in recently beleaguered crude oil futures also put pressure on the dollar. US crude has gained more than 9 percent this week, while Brent has gained 2 percent as it pulled away from 11-year lows.
The dollar index, which tracks the US unit against a basket of six rival currencies, inched down about 0.1 percent to 97.919, well below the two-week high of 99.294 set last week in the wake of the US Federal Reserve’s widely anticipated interest rate hike.
The index is still up 8.5 percent for the year, despite being on track to shed 0.7 percent on the week and more than 2 percent for December.
Against its Japanese counterpart, the greenback was last down about 0.2 percent at 120.20 yen, after earlier dipping to 120.12, its lowest since Nov. 3, coming within sight of the 119-yen level it has not breached since late October.
“People continue to take profits on their dollar positions, as the end of year nears,” said Kaneo Ogino, director at foreign exchange research firm Global-info Co in Tokyo.
The yen’s upside was seen limited by uncertainty about whether Bank of Japan Governor Haruhiko Kuroda might try to convince policymakers to expand stimulus as early as next month.
“Some people expect Kuroda to take more action. And that makes them nervous,” Ogino said.
The dollar scaled a more than two-week high of 123.590 yen a week ago, but tumbled off that peak later in the day after the BOJ tweaked its monthly asset-purchase program, on the perception that the minor steps made it less likely that the BOJ would ease monetary policy further.
A mixed spate of data released earlier on Friday might give some investors reason to change these perceptions. Japan’s core consumer prices rose for the first time in five months in November, but a drop in household spending cast doubt on the BOJ’s prediction that strong consumption will lift prices and help the bank meet its 2 percent target.
The government downgraded its assessment to say household spending was weak, compared with the previous month’s view that it was moving sideways, rekindling speculation that the BOJ might consider further steps next year.
The euro edged down about 0.1 percent to $1.0956, and slipped about 0.3 percent against the yen to 131.56.
Meanwhile, China’s yuan firmed against the dollar in line with the central bank’s higher guidance rate, and is set for a slight weekly gain after seven straight weeks of losses – the longest weekly losing streak in 20 years.