TOKYO (AFX-ASIA) - The dollar was top-heavy against the yen in midafternoon trade after the early Tankan-related yen selling eased in afternoon trade and exporter demand for the yen emerged, dealers said. Overall trading was thin and quiet due to the Easter holiday in many overseas markets, they said. The large manufacturers' diffusion index in the Tankan survey of the Bank of Japan came in at minus 38, weaker than the economists' forecast of a slight improvement. "Tankan came in worse than expected. But it was not bad enough to create a surprise to the market here. I think Tankan just confirmed that the recovery in large manufacturers is slightly slower than expectations," the dealer said. The dealer said that he expects that the dollar will be traded in a weak tone against the yen, after comments by Federal Reserve Bank of New York President William McDonough last week that the dollar is "slightly overvalued" on a purchasing power parity basis. US Treasury Secretary Paul O'Neill said that the US government's strong dollar policy remains unchanged, after comments by McDonough. "As McDonough is very close to O'Neill, it is highly possible that the comments are what the Fed really thinks about the dollar," the dealer said. He said the market will be nervous about any negative comments about a strong dollar for the time being, adding that: "I think the dollar will react instantly to such negative comments." He added that a weak dollar will also be accelerated by long-position adjustments by investors. "Some investors bought the dollar actively as they expected that foreign investment will be increased from April. I think that it is possible that investors will turn to adjust their dollar-long positions," he said. The euro was little changed against the major currencies amid the Easter holiday in the UK and Germany, dealers said. They said investors will continue to be cautious of euro-trading ahead of two central bank policy board meetings -- that of the European Central Bank and that of the Bank of England. The dealer said he does not expect any policy changes by the two central banks this week. The dealer said he expects the euro/dollar to move in the range of 0.8800-0.8700 for the time being.