The dollar rose to a 10-week high against the yen on Thursday as markets grew more confident in the Federal Reserve's cautious approach to further monetary easing even as they awaited an inflation report later in the day.
The dollar index, which measures the greenback against a basket of six major currencies, held steady near a nearly two-month high touched overnight, as traders scaled back bets on a U.S. interest rate cut this year after stronger-than-expected employment data last week.
The euro held near its lowest level since August 13 against the dollar.
Economists polled by Reuters said the September CPI, due at 1230 GMT, is likely to show U.S. core inflation holding steady at 3.2 percent year-on-year.
According to the CME FedWatch tool, traders expect an 85 percent chance the Fed will cut rates by 25 basis points at its next meeting on Nov. 7, with a 15 percent chance the central bank will leave rates unchanged.
The dollar index was steady at 102.89 by 0500 GMT, close to Wednesday's high of 102.93, which it has not reached since Aug. 16.
The US currency rose to 149.40 yen, and earlier touched 149.54 yen for the first time since August 2.
The euro was steady at $1.0940 after falling to $1.0936 in the previous session.
The risk-sensitive Australian dollar rose 0.32 percent to $0.6740, supported by a rise in shares in China, the country's largest trading partner, as the East Asian nation's central bank launched a swap program aimed at supporting the stock market.
China's Ministry of Finance is scheduled to hold a press conference on fiscal policy on Saturday.
The New Zealand dollar rose 0.43 percent to $0.6089, after tumbling 1.19 percent to a three-week low of $0.6053 on Wednesday, when the central bank cut interest rates by a half-point and hinted at more monetary easing ahead.
