The dollar was on the defensive today after firm US payrolls data last week eased market anxiety over chances of a global slowdown and boosted demand for the euro and growth-leveraged currencies.
The dollar looked vulnerable against the yen after failing to maintain its gains following Friday's payrolls data, though caution about Japanese intervention deterred further yen buying.
"When risk appetite comes back, both the dollar and the yen are weak. But because the dollar has low interest rates despite US twin deficits, its weakness tends to stand out even against the yen," said Tohru Sasaki, chief FX strategist at JP Morgan Chase Bank.
"This shows the dollar/yen is unlikely to rise whether global markets are leaning towards risk taking or not.”
US non-farm payrolls fell 54,000, a much smaller drop than the predicted 100,000. Private employment, considered a better gauge of labour market health, increased 67,000.
In currency markets, rising risk appetite has tended to help the euro and higher-yielding currencies in recent months, as investors increasingly see the greenback as a funding currency for investments on expectations of a prolonged period of near zero rates in the US.
The euro changed hands at $1.2887, having risen to $1.2898 after the payrolls data on Friday, its highest in two weeks. It faces resistance at around $1.2897, a Fibonacci retracement from early July to August. More resistance is seen around $1.2920-35, which capped the currency in mid-August.
The Australian dollar fetched $0.9150, down about 0.3 per cent from late US levels last week but still near a four-week high around $0.9176 hit after the US payrolls figures.
The Aussie needs to tackle resistance around $0.9180, its trendline from highs in April and August, and the $0.9220-25 area, its peak in early August.
Dollar/yen stood at 84.40 yen per dollar, not far from a 15-year low of 83.58 marked late last month. It rose briefly to 85.23 after the payroll data, but quickly erased the gains.
The yen has been bought in the past few months as investors tend to favour currencies from countries with a current account surplus when they want to avoid risky assets.
Reuters