The U.S. trade deficit hit $61.04 billion in February, above $60 billion for the first time and well above forecasts of a $59 billion gap. But traders and analysts said the currency market had been braced for a high number.
"The dollar had moved down ahead of the trade figures, so that tells me the market had discounted the bad numbers," said Marshall Gittler, senior market strategist at Deutsche Securities in Tokyo.
The minutes of the Federal Reserve's March meeting showed policymakers were worried about inflationary pressures but did not at that point see the need to adopt a more aggressive monetary policy.
The euro hovered around $1.2930 close to its late New York levels and holding above a two-month low of $1.2800 hit last week, according to data from electronic trading platform EBS.
Against the yen, the dollar dipped to near 107.34 yen from around 107.70.
Gold perked up in early European trade on bargain hunting. Spot gold rose nearly $2 dollars to around $428.70 an ounce, up from $426.90 last quoted in New York.
U.S. Treasury debt prices swung higher, sending benchmark yields to a one-month low, reflecting a view in the bond market that the Fed intended to stick with gradual rate increases.
The yield on the benchmark 10-year note touched 4.36 percent, its lowest since early March. In Asia it had recovered a little over a basis point to 4.37 percent.
Japanese government bond (JGB) yields edged lower in the afterglow of a surprisingly strong five-year JGB auction the previous day, helped also by the slip in U.S. Treasury yields.
Analysts said Tuesday's auction confirmed that investors were keen to buy even though yields were near two-month lows.
The yield on the benchmark 10-year JGB was unchanged at 1.34 percent, while five-year yields were down 0.5 basis points at 0.530 percent.