LONDON (AFP) - The dollar firmed against the euro but eased against the yen on Tuesday when market players were cautious before publication of US retail sales data, dealers said.
The euro eased to 1.3171 dollars in early European trading, from 1.3189 dollars late in New York on Monday.
The dollar fell to 117.39 yen, from 117.63 yen late on Monday.
"The market at this moment is directionless. Traders are hesitant about which direction to take," said Kosuke Hanao, forex dealer at HSBC.
Traders sat on their hands ahead of US retail sales figures due later on Tuesday as well as consumer prices on Friday, looking for fresh clues on the health of the world's largest economy and the future direction of US rates.
The euro clawed back some ground after news that investor confidence in Germany continued rising this month, amid signs the economic fallout from the higher sales tax this year will prove only limited, according to a new poll.
The ZEW economic research institute's economic expectations index, based on a poll of 309 analysts and institutional investors, rose by 6.5 points to plus 2.9 points in February, ZEW said in a statement.
Although the increase fell short of analysts' expectations, it was the third monthly rise in a row since the barometer hit a 13-year low of minus 28.5 points in November.
At the Canadian Imperial Bank of Commerce, economist Audrey Childe-Freeman noted that the report was a "small euro positive."
Dealers expect Tuesday's US retail sales to have only a limited impact on the market as players anticipate the US Federal Reserve will keep rates steady at 5.25 percent for the foreseeable future.
"The market expects the Fed to keep its interest rates on hold, so there won't be a lot of volatility. It's not as if the Fed will change its policy based on these numbers," added Hanao.
Dealers said concerns over the US sub-prime housing market and the possibility leading lender New Century Corp could file for bankruptcy had added to the unwinding of carry trades.
The yen strengthens as investors unwind their carry trades -- where money is borrowed in countries with low interest rates to be invested in economies with higher returns.
The euro was changing hands at 1.3171 dollars, against 1.3189 dollars on Monday, 154.59 yen (155.14), 0.6829 pounds (0.6824) and 1.6133 Swiss francs (1.6154).
The dollar stood at 117.39 yen (117.63) and 1.2245 Swiss francs (1.2246).
The pound was being traded at 1.9288 dollars (1.9325).
On the London Bullion Market, the price of gold increased to 650 dollars per ounce, from 647.75 dollars late on Monday.
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