Investing.com - The dollar eased against the yen and the euro on Tuesday, but remained close to multi-year highs as investors locked in gains following the greenback’s rally in recent sessions.
USD/JPY was down 0.45% to 113.48, holding below the seven-year peaks of 114.20 struck in the previous session.
The yen remained under pressure after the Bank of Japan surprised markets by restarting its bond purchasing stimulus program on Friday, in a bid to shore up the faltering economic recovery.
The BoJ acted after data showed that inflation fell to its lowest in nearly a year in September, as a sales tax hike which came into effect in April continued to hit domestic demand.
The move fuelled expectations that the European Central Bank will have to implement quantitative easing measures in order to stave off the threat of deflation and spur growth in the euro area.
Data on Monday highlighted the diverging monetary policy outlook between the Federal Reserve and its major peers.
The Institute of Supply Management reported that U.S. manufacturing activity rose more strongly than expected in October.
In contrast, a report showed that manufacturing activity in the euro zone struggled to grow last month, while manufacturing activity in China slumped to a five-month low.
EUR/USD was up 0.26% to 1.2515, not far from the two year trough of 1.2437 set on Monday.
The US dollar index, which tracks the performance of the greenback against a basket of six major currencies, slid 0.23% to 87.26, after rising to a four-year peak of 87.54 on Monday.