The dollar rose against the euro and the yen on Wednesday, but the rebound in thin trading was seen as temporary and traders expect the U.S. currency to test record lows versus the euro again in coming days.
Dollar-buying was partly a reaction to the selling that took the currency to a fresh all-time low against the euro and a three-week low versus the yen overnight.
"The dollar is just rebounding from recent selling and over the longer term, it remains under pressure," said Hideaki Furumaya, forex manager at Trust and Custody Services Bank.
Dealers said that trade would likely be kept in check in Tokyo as many of their colleagues were away, and due to wariness after the Japanese authorities promised to watch out for sharp movements in foreign exchange rates over the New Year holidays.
Given the increasing interest of some central banks in holding the euro as a key component of their foreign reserves, any fall in the currency will likely offer up bargains and shore the euro up again, traders said.
"I think it will be hard to stop the euro from rising against the dollar," said Furumaya.
At 2225 EST, the euro bought around $1.3585. That was down from $1.3612 in late trade in New York, where the euro hit a record high of $1.3644, according to data from electronic trading platform EBS.
The dollar rose to around 103.35 yen from 103.06.
The euro was at 140.45 yen, off an overnight peak of 140.62 yen but in sight of the record high of 140.90.