The dollar stood just below a five-month high against the yen on Tuesday but it fell from a recent six-week high versus the euro as investors waited for U.S. economic data releases later this week.
The closely watched non-farm payrolls data is due on Friday. Before that, consumer confidence, final economic growth and durable goods numbers will come out.
Investors are keen to see if the economic figures from the world's largest economy support the case for faster monetary tightening, which the Federal Reserve signaled last week.
"There might be some non speculative accounts willing to reduce some of their short dollar exposure (buy dollars), going into payrolls," said Paul Mackel, currency strategist at ABN AMRO in London.
"But I think we shouldn't really see another extension of dollar strength much more going into payrolls."
The dollar rose to 107.38 yen, according to electronic trading system EBS, its highest level since late October, helped also by last minute buying by Japanese importers ahead of the fiscal year-end on Thursday.
According to Reuters data, the dollar matched the previous day's five-month high of 107.37 yen on Tuesday. At 2:45 p.m. EST it traded at 107.08 yen.
The dollar has rallied in the past week after the Fed suggested in its post-meeting statement that it might raise rates more aggressively if inflation heats up.
Most market players expect the U.S. central bank to keep raising the benchmark federal funds rate, with some forecasting a rise to around 4 percent by the end of 2005, from the current 2.75 percent.