* Dollar hit by Japanese exporter selling
* Activity subdued because of year-end holiday
By Rika Otsuka
TOKYO, Dec 24 (Reuters) - The dollar dipped against the yen on Wednesday, pressured by light selling from Japanese exporters a day after dismal U.S. growth and housing data suggested a prolonged recession ahead.
The euro rose versus the dollar a day after European Central Bank President Jean-Claude Trichet said market participants have underestimated the importance of the steps the central bank has taken so far, somewhat cooling expectations for a euro zone interest rate cut in January.
Activity was light as many traders and investors in Asia had left for the holidays, while those who were still working concentrated on position-squaring, reluctant to take fresh positions. "The dollar is staying above the 90 yen level just because those who had sold the U.S. currency before Christmas are buying it back," said Tsutomu Soma, senior manager of foreign assets at Okasan Securities. "The dollar's long-term outlook remains bearish as data continues to show how weak the U.S. economy is."
The dollar edged down 0.1 percent from late U.S. trade to 90.87 yen.
The U.S. currency rose versus the yen the previous day as investors locked in profits on the Japanese currency's sharp rally to a 13-year peak near 87 yen earlier this month.
Traders said Japanese exporters were dollar sellers as they expect the U.S. currency to resume its slide next year, wanting to repatriate their profits when it hovers above the psychologically important 90 yen.
U.S. data showed on Tuesday the world's biggest economy shrank 0.5 percent in the third quarter and existing home sales fell by a record amount last week as the recession picked up pace. The euro rose 0.2 percent against the dollar to $1.3947. Against the yen, the single European currency was little changed at 126.75 yen.