Investing.com - The dollar was up more than 1% against the yen on Tuesday after Japan’s Nikkei steadied following extreme volatility in recent sessions, while expectations that the Federal Reserve will soon taper its asset purchase program underpinned demand for the dollar.
During European late morning trade, the dollar rallied against the yen, with USD/JPY jumping 1.05% to 101.99.
Japanese equities rebounded on Tuesday after the Bank of Japan said it would fine-tune market operations after recent volatility in Japanese bond markets threatened to undermine the central bank's massive easing program.
Demand for the dollar continued to be supported by expectations that the U.S. central bank is moving closer to winding down its USD85 billion-a-month asset purchase program.
Fed Chairman Ben Bernanke said last week that a decision to scale back bond purchases could be taken in the "next few meetings" depending on economic data.
Elsewhere, the euro was steady against the dollar, with EUR/USD dipping 0.01% to 1.2928.
The dollar gained ground against the Swiss franc, with USD/CHF climbing 0.47% to 0.9676.
The dollar was little changed against the pound, with GBP/USD inching up 0.02% to 1.5105.
The greenback was mixed against its Australian, New Zealand and Canadian counterparts, with AUD/USD rising 0.51% to 0.9680, NZD/USD up 0.41% to 0.8113 and USD/CAD inching down 0.03% to trade at 1.0334.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.13% to 83.85.
Investors were looking ahead to U.S. private sector data on house price inflation and a report on consumer confidence later Tuesday.
