Dollar rises against yen and euro

NEW YORK (CNNMoney.com) -- The dollar gained against the yen and euro Wednesday following the resignation of Japanese Prime Minister Yukio Hatoyama.

What prices are doing: The dollar posted a 0.1% gain over the Japanese yen, to ¥92.229 Wednesday, after rising as much as 1.3% in the trading session.

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Click the chart to view other foreign exchange rates.

Click the chart to view other foreign exchange rates.

Meanwhile, the dollar inched up about 0.03% against the euro to $1.225.

The dollar was virtually flat against the the British pound at $1.465.

What's moving the market: The yen retreated against the dollar and other major currencies Wednesday after Japanese Prime Minister Yukio Hatoyama announced his resignation.

Concerns about political instability in the country put downward pressure on the yen, as did expectations about Hatoyama's possible successor -Finance Minister Naoto Kan - who favors a weaker currency to aid the recovery of the Japanese economy. Investors are wary of driving the yen higher as they await the outcome of elections expected to be held later in the week.

The euro posted small losses against the dollar a day after it touched a fresh four-year low of $1.2111.

Investors welcomed reports that central banks of Brazil, India, Russia, Japan and South Korea do not plan to change their reserve currency portfolios away from the euro and the dollar in the near term, but that news for the euro zone's shared currency was still not enough to translate into major gains.

"That tells you all you need to know about how the people in the market feel about the euro right now," said Neil Mellor, a currency strategist with the Bank of New York Mellon's London office. "The euro is no longer the euro we once knew. Any positive news has seen very little upward movement."

The European debt crisis has sent the euro plummeting over the last month as risk averse investors flee to the safe-haven appeal of the dollar amid fears of economic instability in the region.

Questions about a European rescue package valued at close to $1 trillion still hang in the air, said Mellor, who expects to see the currency keep falling and even approach parity with dollar later this year.