By Hideyuki Sano
TOKYO (Reuters) - The dollar steadied on Tuesday as the market's focus shifted back to U.S. trade policy as investors wagered U.S.-led attacks on Syria would not escalate into a wider conflict in the Middle East.
An index that tracks the dollar against a basket of six currencies <.DXY> was little changed after a 0.4 percent fall on Monday, which took it to 89.424, near its two-week low of 89.355 last week.
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Against the yen, the dollar softened to 107.12 yen <JPY=>, off its seven-week high of 107.78 yen touched on Friday as traders braced for a meeting between U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe on Tuesday and Wednesday.
Tokyo is eager to avoid being pushed into talks on a two-way free trade agreement aimed not only at market access but at monetary and currency policies.
But traders suspect Washington could put pressure on Japan after the U.S. Treasury's semi-annual currency report published on Friday kept Japan on a monitoring list for possible manipulation.
Trump himself also accused Russia and China on Monday of devaluing their currencies, triggering selling in the dollar.
The euro <EUR=> traded at $1.2380. It has been stuck in a tight range around $1.22-25 since late January.
As uncertainty on trade loomed large, markets showed a largely muted response to other economic news.
U.S. retail sales rebounded in March after three straight monthly declines as households boosted purchases of motor vehicles and other big-ticket items
"Markets are focusing more on trade and political headlines than economic data. These days it is hard to tell in advance what will move markets. We just have to deal with whatever headlines that come out," said Shinichiro Kadota, senior FX strategist at Barclays in Tokyo.
Since last month, Trump came up with a series of raid-fire tariff proposals, some of them already in place, heightening worries they could lead to a damaging trade war and disrupt the global economy.
Elsewhere the pound pushed past the $1.43 mark, approaching a post-Brexit referendum high of $1.4346 touched in January as investors' focus shifted to data that could cement expectations of a May interest rate increase and away from Britain's military intervention in Syria.
The pound last traded at $1.4340 <GBP=D4>.
In Asia, Chinese economic data including the first quarter gross domestic product is the main focus for the day.
Economists expect the Chinese economy to have expanded 6.7 percent in the first three months of 2018 year-on-year, slowing slightly from 6.8 percent in the preceding quarter.
(Editing by Shri Navaratnam)