The dollar edged up versus the euro on Wednesday and kept most of the previous day's gains against the pound, but traders and investors hesitated to take big positions in quiet pre-holiday trade.
The U.S. currency failed to gain against the yen despite yet more poor readings on the Japanese economy, with the trade surplus shrinking in November and service sector activity declining in October for the first time in three months.
Currencies remained stuck in thin ranges as 2004 winds down and the market looks to see whether the dollar's ongoing woes extend into the New Year, although its focus stayed on the U.S. budget and trade deficits.
"The trend is still for dollar weakness," said Kikuko Takeda, manager of currency research at Bank of Tokyo-Misubishi. "Market psychology is focusing only on U.S. structural issues."
The dollar staged a rare rally on Tuesday, jumping nearly 1 percent against the British pound after a survey showed the drop in UK house prices accelerated in November to the fastest rate since the recession of the early 1990s.
While falling house prices could dampen consumer spending and deter the Bank of England from raising interest rates, traders said further selling in the pound was limited. Just last week sterling hit a 12-year high vs the dollar.
At 1:40 a.m. EST, sterling fetched around $1.9285 compared with Tuesday's low of 1.9251 and late New York's 1.9274.
The dollar was little changed at 104.40 yen, while the euro bought about $1.3360 compared with 1.3372.
Japan's trade surplus in November fell 39.2 percent from the same month a year earlier to 602.0 billion yen ($5.77 billion), far lower than forecasts. Some economists blamed more expensive oil imports for the reduced surplus.
Despite the overall deterioration, exports to the United States picked up 8.5 percent year-on-year, while exports to China rose 21.8 percent.
In keeping with their relatively upbeat view of the economy, members of the Bank of Japan's policy board agreed that exports would get back on the recovery track, according to minutes of the board's Nov. 17-18 meeting, released on Wednesday.
The BOJ also said it would monitor exchange rate movements and their impact on the economy.
Other data coming out later in the session include euro zone current account figures for October and the minutes of the Bank of England's policy meeting held two weeks ago.