The dollar fell against other major currencies Wednesday in Asia as investors trimmed bets on the greenback ahead of a closely watched speech by the Federal Reserve chairman and the release of Federal Open Market Committee meeting minutes scheduled later in the global day.
In recent weeks, investors have bet on the dollar's ascent as they speculated that the U.S. will be the first major economy to exit from easing measures pumping cash into the banking sector.
While investors are primed to take trading cues from Fed Chairman Ben Bernanke's speech and the June FOMC minutes, some are already trimming their positions ahead of the two events, Tokyo dealers said.
"The dollar will likely rise steadily in the long run," said Shuichi Kanehira, head of FX spot trading at Mizuho Bank."But there will be many adjustments along the way."
Also helping strengthen the Japanese yen against the greenback was a surprise fall in Chinese exports and imports data that dented risk-taking sentiment, fueling demand for the safe haven Japanese currency.
China posted a surprise drop in exports in June amid slack global demand, revealing further weakness in one of the main drivers of growth for the world's second-largest economy. Exports fell 3.1% in June from a year earlier, compared with a 3.3% expansion expected. Imports also fell 0.7% from a year earlier, missing a 5.5% increase forecasted.
"Caution is growing over...whether China's gross domestic product data to be released Monday will be in line with the nation's target rate of 7.5% or whether we'll see shocking figures," said Masaru Ishibashi, head of the FX trading group at Sumitomo Mitsui Banking Corporation.
The dollar was at ¥100.50 as of 0530 GMT from ¥101.15 late Tuesday in New York, according to EBS. The euro was at ¥128.47 from ¥129.34. The Wall Street Journal Dollar Index, which tracks the dollar against a basket of currencies, was at 76.079 from 76.288.
Despite the weakening of the dollar, the greenback's falls were limited against the euro after Standard & Poor's downgraded Italy's rating by one notch on Tuesday, citing the country's worsening economic prospects. The euro was at $1.2787 from $1.2781.
The dollar was at 0.9720 Swiss francs from 0.9729 francs. The U.K. pound was at $1.4896 from $1.4860.