The euro slipped in Asia Tuesday ahead of a European Central Bank (ECB) meeting later in the week, with a sharp dip in eurozone inflation fuelling speculation of an interest rate cut.
The European single currency fetched $1.3496 and 132.83 yen in Tokyo, compared with $1.3516 and 133.25 yen in US trade Monday.
The euro is well below the $1.38 level last week before data showing inflation hit a four-year low.
The dollar bought 98.38 yen, down from 98.59 yen in New York but still above Tokyo levels on Friday.
Figures showing the 17-nation eurozone drifting toward deflation have sparked expectations that the ECB will have to cut record-low rates or take other easing action on Thursday to boost economic growth.
"The market is... increasingly of the view that the ECB might cut rates, possibly as early as the 7 November meeting, after the surprisingly weak recent inflation data out of the eurozone," National Australia Bank said.
The single currency will likely see volatile trading against the dollar this week, especially ahead of the ECB policy board meeting, a senior dealer at a large bank in Tokyo told Dow Jones Newswires.
"If (ECB chief Mario) Draghi at the post-meeting press conference signals more easing to come the euro will likely be sold further," he said, adding "the pair could also be affected by the US GDP data to be released on that day as well."
Dollar trading was focused on US data releases this week, including October jobs figures and third-quarter economic growth. They come after mixed comments from Federal Reserve officials failed to supply concrete clues about the bank`s timeline for winding down its stimulus programme.
The dollar was mixed against other Asia-Pacific currencies.
It fell to Sg$1.2424 from Sg$1.2428 in Tokyo on Monday, to 1,062.07 South Korean won from 1,062.15 won, and to 43.29 Philippine pesos from 43.32 pesos.
It also lost to Tw$29.40 from Tw$29.42 and to 11,356 Indonesian rupiah from 11,373 rupiah.
But the greenback rose to 31.31 Thai baht from 31.28 baht and to 61.84 Indian rupees from 61.73 Indian rupees.
The Australian dollar fetched 94.71 US cents compared with 94.80 cents, while the Chinese yuan was flat at 16.15 yen.
