The dollar nudged higher on Wednesday, as upbeat U.S. economic data lifted the greenback against the yen and headline risks around U.S.-China trade relations and tensions in the Middle East appear to subside.

The greenback was buoyed by better than expected economic data with the market focusing on fundamentals as perceived political risks abated. Western strikes on Syria are not expected to escalate and major U.S.-China trade-related headlines took a backseat.

USD/JPY rose 0.3 percent to 107.31 from a low of 106.885 on Tuesday, as improving risk appetite reduced demand for the haven yen.

Japan's Nikkei tracked Wall Street's rise and gained more than 1 percent, touching a seven-week peak.

EUR/USD slipped to 1.2349 overnight. The common currency rose to a three-week high of 1.2414 on Wednesday but eased to 1.2336 on a ZEW research institute survey showing German investor morale reached its lowest since November 2012.

GBP/USD trades at 1.4285, slightly off from a post-Brexit referendum 22-month high of 1.4377 scaled early on Tuesday by weaker-than-expected British wage data.

The markets were still pricing in a more than an even chance of the Bank of England hiking interest rates in May, which had helped sterling advance aggressively this month.