The dollar held under $1.08 per euro for a second day on Thursday ahead of a vote on Republican healthcare plans seen as a litmus test of President Donald Trump's ability to legislate in Congress and deliver on tax and spending promises.
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With several major currency pairs steadying after a week of losses for the dollar, the biggest mover was Australia's dollar , down half a percent on the back of nerves in China's money market and a slump in prices for its iron ore exports.
Morning trade in Europe was dominated by a much higher than expected rise in UK retail sales following three months of falls, which bolstered speculation of a rise in Bank of England interest rates this year and prodded sterling higher.
After losing 3.5 percent in the past 10 days, the dollar was roughly steady at 111.05 yen. It gained 0.1 percent to $1.0786 per euro and was marginally higher against the basket of currencies used to measure its broader strength.
"We have a holding pattern ahead of the healthcare vote tonight," said Richard Cochinos, European head of G10 currency strategy at Citi in London.
"It is a critical vote for how the macro community views the outlook. If they cannot get this done, then it will be difficult to adjust the tax overhaul. It puts everything in question and we may well see the dollar below 110 yen."
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The greenback surged higher after Trump's election last year on expectations of tax changes that would see billions repatriated to the United States and allow the White House to spend more, boosting growth, inflation and interest rates.
That faith has evaporated steadily since the turn of the year and the dollar has fallen against all of its major peers in response.
With global equities buffeted by a range of concerns this week, Wall Street on Tuesday suffered its worst day since Trump's election.
The yen has also gained as Tokyo dealt with a political scandal involving Prime Minister Shinzo Abe, who faces questions about his ties to a nationalist school involved in a murky land deal.
"If the situation over the prime minister's dealings with the school remains unresolved, the yen could gain further against the dollar," said Yukio Ishizuki, senior currency strategist at Daiwa Securities.
The 1.4 percent monthly rise in UK retail sales in February eased some of the concerns around softening consumer spending that have afflicted sterling in the past month.
But its gains were contained at $1.2528, or around 0.3 percent on the day, some measure of the broader worries about Britain's path out of the European Union which have seen many major banks forecasting further falls.
"It wasn’t all good news with the January data being revised lower," said Oanda market analyst Craig Erlam.
"While February was a good month for the consumer, the trend is both disappointing and concerning. The substantial depreciation of the pound since the June referendum combined with rising oil prices is eating away at people’s disposable income and the cracks are starting to appear."
For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets (Additional reporting by Shinichi Saoshiro in TOKYO; Editing by Tom Heneghan and Richard Lough)