By Kosaku Narioka 
 

The U.S. dollar declined in Asia on Wednesday amid geopolitical uncertainty in the Middle East, pushing U.S. Treasury yields lower.

Market participants have been betting for the dollar on the view that possible Federal Reserve rate increases would mean higher Treasury yields, which typically attract more investment, but some were trimming their bets because yields haven't risen much, Tokyo dealers said.

The yield on the benchmark 10-year U.S. government note fell to a three-week low of 2.243% on Tuesday, in part driven by geopolitical tensions caused by Turkey shooting down a Russian military jet along the Syrian border. It declined further to 2.237% on Wednesday in Asia.

Kosuke Hanao, head of foreign exchange at HSBC in Tokyo, said he doesn't anticipate a flare-up between Russia and North Atlantic Treaty Organization, which Turkey is a member of.

Alan Oster, group chief economist at National Australia Bank, said the incident pushed U.S. Treasury and the yen higher, but markets aren't seriously factoring in a further escalation of tensions in the Middle East.

"Unless it escalates into a NATO versus Russia... I don't think it really matters that much," he said.

The dollar fell to 122.39 yen as of 0450 GMT from Y122.52 late Tuesday in New York, according to EBS. The euro rose to $1.0657 from $1.0643.

The dollar's downside against the euro may be limited, as many anticipate the European Central Bank to take additional easing steps next week, as indicated by President Mario Draghi, analysts said.

"I think he is going to do it. So you probably expect the euro will weaken a bit further," Mr. Oster said.

Mr. Hanao said the ECB probably doesn't need to undertake massive easing measures given the euro's sizable decline this year. The euro has lost 12% year to date.

"European economies are on the mend," he said. "They don't need to do anything astonishing."

For the rest of the global day, market participants are paying attention to a series of U.S. economic indicators due later to gauge the strength of the U.S. economic recovery.

 
Interbank Foreign Exchange Rates At 23:50 EST / 0450 GMT 
 
 
 
                           Latest       Previous   %Chg    Daily    Daily   %Chg 
Dollar Rates                               Close            High      Low  12/31 
 
USD/JPY Japan           122.42-43      122.53-54  -0.09   122.57   122.26  +2.26 
EUR/USD Euro            1.0656-59      1.0642-45  +0.13   1.0679   1.0641 -11.91 
GBP/USD U.K.            1.5095-97      1.5084-86  +0.07   1.5116   1.5078  -3.10 
USD/CHF Switzerland     1.0165-69      1.0166-70  -0.01   1.0175   1.0151  +2.25 
USD/CAD Canada          1.3292-97      1.3304-09  -0.09   1.3311   1.3280 +14.40 
AUD/USD Australia       0.7262-66      0.7255-59  +0.10   0.7277   0.7252 -11.10 
NZD/USD New Zealand     0.6571-77      0.6552-58  +0.29   0.6581   0.6551 -15.66 
 
Euro Rate 
EUR/JPY Japan           130.44-48      130.41-45  +0.02   130.63   130.35  -9.99 
 
 
Source: ICAP PLC 
 

Write to Kosaku Narioka at kosaku.narioka@wsj.com

(END) Dow Jones Newswires

November 25, 2015 01:31 ET (06:31 GMT)