By Myra P. Saefong, MarketWatch TOKYO (MarketWatch) -- The U.S. dollar traded modestly weaker against most major currency rivals in Asian trading Tuesday as traders continued to mull the likelihood of a rate hike by the U.S. Federal Reserve. The dollar fell against its Japanese counterpart, buying 88.83 yen, compared with 89.47 yen in Monday's late North American trading. The euro was changing hands at $1.4843, up from $1.4823 late Monday. "Although the [U.S. dollar] has slipped as markets pare back expectations of rate hikes, the currency appears to be in a win-win situation and will likely see limited downside as risk aversion creeps back," Mitul Kotecha, head of global forex strategy at Calyon, said in a note to clients. On Monday in North American trading, Federal Reserve Chairman Ben Bernanke said a fragile economic recovery meant inflation was likely to remain "subdued," signaling the Fed wouldn't hike rates until far in the future. His comments left the dollar little changed against a basket of other major currencies, capping a rally sparked by a surprisingly strong U.S. employment report on Friday. See Monday's Currencies column.

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