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Tokyo - The euro held its gains in thin trading on Tuesday, after a European Central Bank (ECB) official hinted at another wave of stimulus, while fears about China's economy dented the yuan.
ECB executive board member Yves Mersch said policymakers have "by no means used up all our ammunition", according to an excerpt from an interview with the International Bankers Forum.
The possibility of more easing - which would tend to weaken the euro - comes after the ECB disappointed markets this month with the limited scope of its newest bid to revive the struggling eurozone economy.
The euro surged in the wake of the ECB's less-than-expected policy measures.
"In their last big statement, they didn't deliver what the markets were expecting," Jason Wong, a currency strategist in Wellington at Bank of New Zealand, told Bloomberg News.
In Tokyo on Tuesday, the unit fetched $1.0980 against 1.0970 in New York, while it also edged up to ¥132.15 from ¥132.05.
The euro has surged nearly four percent against the dollar this month, its best since April.
In other trading, the dollar edged down to ¥120.26 from ¥120.38, while the yuan slipped to 6.5675 against the greenback from 6.488 on Monday.
Market sentiment has taken a hit as oil prices fell again Monday, after a decline in profits at China's industrial firms aggravated concerns about the world's number two economy, a key driver of global growth.
Meanwhile, the Indonesian rupiah fell 0.17% against the dollar, the South Korean won was down 0.22%, while the Indian rupee edged up 0.02% and the Malaysian ringgit gained 0.09%.
