Euro on defensive; Japan exporters lift yen

Renewed concerns about the euro zone sovereign debt crisis weighed on the single currency on Wednesday, while the dollar also struggled after minutes of the U.S. Federal Reserve's Aug. 9 meeting bolstered expectations for more stimulus.

The dollar and the euro both dipped against the yen, as Japanese exporters bought the currency.

The euro remained under pressure after lukewarm demand at an Italian bond auction threatened to push the euro zone's third biggest economy back to the centre of the region's debt crisis.

Adding to the gloom, data showed euro zone economic sentiment fell more than expected in August and a dispute over Finland's demand for collateral in exchange for bailout loans to Greece continued to fester.

"It keeps coming back and it's going to be with us a bit longer. But the issue for the next 20 hours or so will be funds adjusting their hedge ratios, which a fair few of them do at the end of each month," said Joseph Capurso, currency strategist at Commonwealth Bank.

Capurso said these adjustments could see dips in the euro and the Australian dollar and that could create some buying opportunities in the Aussie.

The euro held steady at $1.4435 , having a hard time regaining ground after dipping 0.5 percent on Tuesday. Small sell orders are seen starting from $1.4480, traders said. more