The euro faced selling pressure against the dollar on Friday after plunging in New York in response to the European Central Bank's surprise decision to cut interest rates and warn of a long period of low inflation.
The dollar managed to claw back some of the losses seen late on Thursday as better-than-expected US economic growth data fuelled speculation the Federal Reserve would soon wind down its stimulus drive stimulus programme. A pullback is positive for the dollar.
In Tokyo afternoon trade, the euro bought $1.3411, compared with $1.3414 late in New York where it had briefly plunged below $1.33. The unit is well down from the levels above $1.35 seen in Tokyo earlier Thursday.
It also changed hands at 131.64 yen in Tokyo, against 131.50 yen on Wall Street but still well below levels above 133 yen on Thursday in Asia.
The dollar edged up to 98.13 yen against 98.02 yen in New York . However, the greenback fetched about 98.60 yen the day before.
ECB policymakers took markets by surprise Thursday by cutting its central or refinancing rate to a record low of 0.25 percent from 0.50 percent.
The move came after data showed eurozone inflation slowing to a four-year low of 0.7 percent last month, raising the spectre of deflation that could lead to a vicious circle of falling prices, declining wages and output.
Bank president Mario Draghi also said the 17 countries that share the euro "may experience a prolonged period of low inflation", which could have a severe impact on the bloc's debt-addled economies.
"If Europe's inflation as well as price expectations slow down further, we won't be able to completely rule out another rate cut next year," Shinichiro Kadota, a currency strategist at Barclays in Tokyo, told Dow Jones Newswires.
Cutting interest rates tends to weigh on a currency as investors chase higher returns elsewhere.
The greenback saw a slight rebound from a sell-off in US trade after the Commerce Department said the economy grew a better-than-expected 2.8 percent in July-September. The figure was well above the 1.9 percent projected by analysts and represented the strongest pace in a year.
Evidence that the economy is staging a recovery has heightened speculation that the Fed will start winding down its $85 billion a month stimulus programme sooner rather than later.
Dealers are now looking to US jobs data due later in the day for a better handle on the strength of the economy.
The dollar was mostly stronger against other Asia-Pacific currencies.
The greenback rose to Sg$1.2438 from Sg$1.2421 the previous day, to 1,063.38 South Korean won from 1,060.68 won and to 43.24 Philippine pesos from 43.23 pesos.
It also rose to 31.37 Thai baht from 31.29 baht and to 62.65 Indian rupees from 61.59 rupees while it was flat at Tw$29.42.
The Australian dollar weakened to 94.63 US cents from 94.76 cents, while the Chinese yuan fetched 16.11 yen against 16.16 yen.
