Graphic: renjith krishnan

New York - The dollar inched lower against the euro and rose slightly against the yen Tuesday as traders gauged the pace of the Federal Reserve's taper of its huge stimulus.

The euro bought $1.3559 around 00:00 SA time, up a bit from $1.3552 at the same time Monday.

The single European currency on Monday had sunk to $1.3506, its lowest level since late November.

The dollar crept up to 104.32 yen from 104.18 yen.

The euro also gained against the Japanese currency, fetching 141.46 yen compared with 141.18.

Traders have their eyes on the Federal Reserve's January 28-29 monetary policy meeting, waiting to see if the Fed will announce a second reduction in its monthly asset purchases that have been aimed at supporting the US economic recovery.

In December, the Fed said it would begin to taper by $10 billion, bringing the purchases to $75 billion.

“Although US job creation slowed markedly last month, many investors suspect that the Fed has seen enough general improvement in the US economy to dial back on stimulus, perhaps by another $10 billion to $65 billion,” said Joe Manimbo, senior market analyst at Western Union Business Solutions.

The dollar was unchanged against the Swiss currency, buying 0.9100 Swiss franc.

The pound rose to $1.6476 from $1.6429. - Sapa-AFP