The U.S. dollar held steady from late U.S. trade on Tuesday at 79.82 yen, hovering near the previous day's high of 80.02 yen, its peak since early July.
The yen has retreated over the past few weeks on growing market expectations that the Bank of Japan will unveil further monetary stimulus at its policy meeting next week in a bid to help the export-focused economy through a global slowdown.
The Australian dollar rose 0.5 percent to $1.0315, having extended its gains after a survey of Chinese manufacters reduced worries of a hard landing in China.
"We may start to see a counter move toward putting risk back on, especially after the risk-off moves we saw the previous day," said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.
Earlier in the day, the Australian dollar had risen after data showed Australian consumer prices rose a surprisingly large 1.4 percent last quarter, prompting the market to scale back bets that Australia's central bank will lower interest rates at its next policy meeting in November.
Interbank futures , which had been implying a two-in-three chance of a quarter point cut from the current 3.25 percent cash rate at the Reserve Bank of Australia's Nov. 6 policy meeting, trimmed chances to about 50 percent after the inflation data.
The euro held steady at $1.2987.
The euro had dipped to as low as $1.2952 on Tuesday, when Spanish bond yields rose in the wake of credit downgrades of five of Spain's regions by Moody's Investors Service.
Expectations that Spain will apply for a bailout, prompting the European Central Bank to start buying its bonds, have helped support the euro in recent weeks, although uncertainty over the timing of such a move has helped to limit its gains.
Against this backdrop, the euro has traded in a range of roughly $1.3170 to $1.2800 since mid-September.
The euro will probably continue to find strong support at levels near $1.2800, said Sim Moh Siong, FX strategist for Bank of Singapore.
"We could still see a relief rally if there is a formal request for aid from Spain. So near-term, I'm looking for one last push up in the euro where I'll be interested to sell if it does go higher," he said.
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