Dollar steady before US Fed minutes, yen hovers below intervention zone

The dollar drifted near the middle of its range of the past three weeks against major peers on Wednesday, as traders looked ahead to the release of minutes from the Federal Reserve's latest meeting for clues about the path for monetary policy.

The dollar index - which measures the currency against a basket of six major peers, including the euro and yen - was little changed at 103.02, after tracking between 103.75 and 102.75 since early June.

Europe's shared currency edged 0.1% higher to $1.0886, recouping some of its 0.34% overnight decline.

The dollar hovered about half a yen below the 145 level that spurred intervention by Japanese authorities last autumn, after last week briefly popping as high as 145.07 for the first time since November.

Moves in the dollar-yen rate have broadly tracked the U.S. 10-year Treasury yield, which dipped as low as 3.841% in Tokyo after resuming trade following the July 4th Independence Day holiday.

"Obviously at this level, the market is paying attention to the potential risk of intervention, but as a medium-term trend, the market is looking for further downside for the yen," said Shusuke Yamada, chief forex and rates strategist at Bank of America in Tokyo.

"We don't see a very high probability that the Ministry of Finance will intervene at the same level as last year - and if the move is not rapid, below 150 we might not see intervention at all."

Australia's dollar was flat at $0.6690, holding on to the previous day's 0.32% advance.

On Tuesday, the Aussie had initially dipped after the Reserve Bank of Australia left interest rates unchanged, but soon flipped to gains, as traders bet the tightening cycle will resume again with one or even two more hikes on the cards.

A stronger Chinese yuan, which buoyed bets for stimulus from Beijing to bolster a shaky economic recovery in Australia's key trading partner, also underpinned the Antipodean currency.

The yuan was little changed at 7.231 per dollar in offshore trading, following a 0.3% rise on Tuesday as it continued its rebound from last week's eight-month low of 7.2857.