The dollar struggled to hold its own on Thursday after its rebound from a near 1-1/2-year low against a basket of currencies run out of steam, with doubts over global growth prospects hobbling the U.S. currency.
The dollar's index .DXY =USD eased to 93.826, down from Tuesday's high at 94.356, which represented a 2.7 percent recovery from its 16-month trough hit earlier in the month.
While the dollar had been supported by a recovery in risk appetite in financial markets, doubts linger over the strength of the global economy with political risks in many places seen as hampering companies' investment plans.
"It is not clear how strong the U.S. economy will be in the April-June quarter. It will be better than the first quarter but it doesn't look so strong," said Makoto Noji, senior strategist at SMBC Nikko Securities.
U.S. economic growth slowed to 0.5 percent in the first quarter, with the strength of the dollar late last year seen as a factor weighing on the economy. That has also fed expectations of a slower pace of rate increases by the Federal Reserve this year, further hampering dollar bulls.
The area around 109.30-40 is where the dollar was capped right after its big fall following the Bank of Japan's decision not to further ease policy in late April and it now looks like a strong resistance level, said Koichi Yoshikawa, executive director of finance at Standard Chartered Bank.
The yen had fallen earlier as traders cut their exposure to the currency after a series of warnings from Japanese Fi nance Minister Taro Aso that the government would intervene to curb any one-sided gains.
But analysts believe Japan will be wary of intervening before it hosts a Group of 7 meeting this month, even though Tokyo is clearly unhappy with an 11 percent rise in the currency since December.
Sterling remains on the defensive as the latest surveys show a referendum on the country's membership in the European Union on June 23 is still too close to call.
The Bank of England's monetary policy committee releases updated growth and inflation forecasts in a quarterly report on Thursday but uncertainty on the "Brexit" is likely to keep the central bank cautious.
(Editing by Shri Navaratnam)
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