The dollar was little changed on Wednesday after some of the biggest U.S. banks warned of an impending recession, while China's yuan firmed as authorities loosened some of the country's zero-COVID rules.
Top bankers from JPMorgan Chase & Co, Bank of America and Goldman Sachs said overnight that the banks are bracing for a worsening economy next year as inflation and high interest rates cut into consumer demand.
The greenback was up 0.32% against the Japanese yen following a 0.16% gain on Tuesday. Yet the euro was flat against the dollar at $1.048, after falling 0.2% in the previous session.
Investors are weighing up the outlook for the U.S. dollar, which surged this year but has fallen in recent weeks on expectations that the Federal Reserve might soon pause its interest-rate hikes.
Some investors believe the recent drop has gone too far and that concerns about the global economy and further Fed rate hikes should boost the currency.
"We've been forecasting a recession in the U.S., the UK, the euro zone and Japan ... It's part of our baseline," said Joseph Capurso, head of international and sustainable economics at Commonwealth Bank of Australia.
"(That) will provide more support to the U.S. dollar as a safe-haven currency."
Against a basket of currencies, the U.S. dollar index was less than 0.1% higher at 105.55.
In Asia, China's yuan firmed as the government announced measures that marked a sharp change to its tough, three-year-old zero-COVID policy that has battered its economy and sparked historic protests.
China's national health authority said asymptomatic COVID-19 cases and those with mild symptoms can self-treat while in quarantine at home.
The announcement was the strongest sign so far that China is preparing its people to live with the disease, though analysts say the path to fully reopening the economy will be long and bumpy and not without risk.
The onshore yuan was last up 0.26% at 6.977 per dollar.
"These are follow-up measures and reinforce the fact that China is taking calibrated steps in the direction of reopening," said Christopher Wong, a currency strategist at OCBC.
"Anticipation of further easing of measures in China should continue to favour RMB (and) RMB-linked assets."
However, investors were also digesting dismal data which showed China's exports and imports shrank at their steepest pace in at least 2-1/2 years in November.
"I think the (COVID) measures were overshadowed by the plunge in exports," said Rob Subbaraman, Asia head of global markets research at Nomura.
"China's reopening will be bumpy in coming months and economic data will likely get worse before it gets better."
The British pound was up 0.13% to $1.215.
The Aussie was roughly flat at $0.6689 after data showed Australia's economy slowed a little in the September quarter, a day after the country's central bank signalled more rate hikes ahead to cool inflation.
The kiwi rose 0.33% to $0.6339.
(Reporting by Rae Wee and Harry Robertson, additional reporting by Scott Murdoch; Editing by Sam Holmes, Kim Coghill and Arun Koyyur)