By Myra P. Saefong, MarketWatch TOKYO (MarketWatch) -- The U.S. dollar traded mostly lower against major rivals by Monday afternoon in Asia, with the greenback's next big move likely to be guided by the outcome of this week's central bank meetings in Japan and the United States. The dollar index (DXY 78.19, -0.01, -0.02%) , which measures the greenback against a trade-weighted basket of six major counterparts, was at 78.167 Monday afternoon in Asia, down from 78.288 in late North American trading Friday. "Much will depend on the key events in the U.S. this week, including the Fed FOMC meeting and the President's State of the Union speech," Mitul Kotecha, head of global forex strategy at Calyon, said in a research note Monday. U.S. dollar bulls will "look for some indications that the U.S. government is serious about cutting the burgeoning budget deficit," he said. Aside from the Fed, the other major central bank to meet this week is the Bank of Japan, Kotecha said. But unless the central bank is "seen to be serious about fighting deflation, USD/JPY may remain under downward pressure against the background of elevated risk aversion." The dollar was slightly stronger against its Japanese counterpart, buying 90.06 yen, compared with 89.97 yen late Friday. The euro was changing hands at $1.4163, up from $1.4139 late Friday. There appears to be plenty of dollar buyers below the 90 yen level -- suggesting that further upside for the yen will be limited, said Kotecha. He sees strong support around 88.84 yen. For last week, the dollar gained about 2% versus the euro and 1% against a basket of currencies as investors turned away from riskier assets on concerns about Greece's financial problems as well as the likelihood of China trying to slow its economic growth. See Friday's currencies column. "Concerns over Greece, China and Washington policy now seem to be converging and risk markets sold off further and faster last week," Tohru Sasaki, chief foreign-exchange strategist for Japan at JP Morgan Securities in Tokyo, said in a note to clients. But on Friday, the U.S. dollar gave back some of its gains to fall below 90 yen, "with risk of slipping further should investor sentiment stay fragile," analysts at Credit Suisse wrote in a research note. Any strength in the yen, however, may be "limited by the market fear of the possibility that the [Bank of Japan] announces another liquidity injection" when it meets Tuesday, Sasaki said. But "these policies are too indirect a form of policy to push [the yen] sustainably lower."

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