The dollar crawled up from a record low against the euro on Tuesday, though the market stayed focused on the U.S. deficits and a growing belief that central banks will not soon stand in the way of the dollar's decline.
Japanese data showing industrial output rebounding less than expected in November and deflation deepening during the same month briefly pushed the yen lower against the dollar and euro.
But other figures showed retail sales beating forecasts in November while the unemployment rate fell to 4.5 percent -- the lowest in six years.
Economists said the data showed Japan's economy struggling in the final months of the year but it also provided relief after months of consistently bad news and provided hope the slowdown in growth will be temporary.
Still, the currency market remains fixated on the massive U.S. current account and budget deficits and the widespread belief a dollar decline is needed -- and perhaps wanted by U.S. officials -- to correct the imbalance.
"Since October the currency market is not reacting much to these kinds of fundamental figures at all. It is focusing on the current account deficit of the U.S.," said Kikuko Takeda, manager of currency research at Bank of Tokyo-Mitsubishi.
David Gilmore, a partner at U.S.-based consultancy Foreign Exchange Analytics, said in a note to clients that the dollar's latest drop "is surely symptomatic of a growing consensus that the dollar downtrend has months more to play out."
In midday Asia trade, the euro bought around $1.3600, down from late New York levels near $1.3620 and from its latest peak of $1.3640.
Analysts had thought the $1.35 level would be a line in the sand for the European Central Bank's tolerance of euro strength, but recent comments from officials have suggested the central bank is not too worried.
The dollar edged up to 103.20 yen, from around 103 yen at the New York close.
The euro was little changed near 140.35 yen after rising on Monday to 140.74 yen, the highest level since June 2003 and close to an all-time high.