The dollar shed most of its early gains in afternoon trade here as profit takers cashed in gains with some investors turning wary ahead of upcoming US data, dealers said.
After gains overnight in Europe with the US markets closed for the Martin Luther King Jr holiday, the dollar continued its upward movement in early Asian action.
A slump in Japanese equities driven by news of a search of Internet firm Livedoor Co's headquarters over a probe into possible breaches of securities laws gave the greenback an early lift against the yen.
But the US unit then fell back in the afternoon as some players elected to take profits ahead of some key upcoming US data over the next few days.
"Our initial thoughts are that worries over corporate governance in Japanese companies are likely to be temporary, as Japan's banks and corporates have spent the better part of this decade in cleaning up their act," said UBS forex strategist Bhanu Baweja.
"We are still looking for the dollar to decline to 113.00 yen over the next 1 and 3 months," he said. As US markets return from a three-day weekend today, attention will be on data releases, including tonight's December industrial production numbers, which are expected to rise 0.5 pct. Tomorrow, the US releases December CPI, which is expected to rise 0.1 pct after an energy-related drop in November and the Treasury International Capital Systems report showing foreign demand for long-term US assets.