Tokyo - The dollar faced selling pressure against the yen Wednesday as investors fretted about an impasse over the US budget that could lead to a shutdown of parts of the economy.
The greenback fetched 98.64 yen in Tokyo midday trade, from ¥98.74 late Tuesday in New York, and well down from the levels above ¥99 seen Monday.
The euro bought ¥132.86 from ¥133.00 while it was flat against the dollar at $1.3469.
US lawmakers are approaching a Monday night deadline to find a deal on a new budget. If no agreement is reached some government agencies could be forced to shut down, which could deal a major blow to the US economic recovery.
"Fiscal D-day is looming, spooking investors," National Australia Bank said.
Traders began moving out of the greenback last week after the US Federal Reserve surprised markets by keeping its $85bn-a-month bond-buying stimulus programme intact.
"Players who had expected the dollar's upturn on a change in the US monetary policy are now forced to review their strategies," a senior trader at a Japanese bank told Dow Jones Newswires.
Japanese exporters are also selling dollars and euros as they look to lock in profits before the end of the month, dealers said.
The euro found a measure of support from a modest gain in the closely watched IFO German business confidence index for September, which represented the fifth consecutive monthly rise.
However, the single currency is down from multi-month highs of Monday after European Central Bank chief Mario Draghi voiced concern about liquidity in the eurozone banking system.
The dollar was mostly stronger against other Asia-Pacific currencies.
It rose to 11 248 Indonesian rupiah from 11 156 rupiah the previous day, to Sg$1.2567 from Sg$1.2533 and to Tw$29.60 from Tw$29.58.
It also strengthened to 31.41 Thai baht from 31.27 baht, to 43.36 Philippine pesos from 43.35 pesos and to 1,077.94 South Korean won from 1 075.28 won.
The US unit eased to 62.63 Indian rupees from 62.69 rupees,
The Australian dollar slipped to 93.74 US cents from 94.13 cents. The Chinese yuan changed hands at ¥16.13 compared with ¥16.12.