By Daniel Leussink
TOKYO, May 28 (Reuters) - The dollar nudged up against its key rivals in early trade on Tuesday as investors waited on more catalysts after the European Union parliamentary elections showed a polarisation of the 28-member block.
The yen was in a holding pattern as U.S. President Donald Trump, who is visiting Japan, is seen putting pressure on Tokyo to reduce the nation's large trade surplus with the United States.
Many of the currency pairs hugged recent ranges, as activity thinned out overnight with stock exchanges in the United States and Britain closed for market holidays.
The euro struggled following remarks from two euro zone officials that the European Commission is likely to start disciplinary steps against Italy on June 5 over the country's rising debt and structural deficit levels, which break European Union rules.
Against a basket of six peers, the dollar gained 0.15% to 97.746 .DXY, trading about 0.6% off a two-year high of 98.371 hit on Thursday. The index is still up 1.65% for the year.
The euro was unchanged at $1.1192 EUR= after bouncing from a 1-1/2-week high of $1.1215 overnight following the outcome of European parliamentary elections.
Pro-European parties retained a firm grip on the EU parliament, provisional results from the bloc's elections showed on Monday, though euroskeptic opponents saw strong gains.
"There is a polarization of the European parliament which is a kind of representation of the overall European political situation," said Masafumi Yamamoto, chief currency strategist at Mizuho Securities. "That will be broadly negative for the euro."
Yamamoto said the news of possible disciplinary steps against Italy over its national debt hurt the euro, though the market reaction was limited due to the U.S. and UK holidays.
Against the yen, the dollar was down a shade at 109.52 yen JPY=, about 0.5% above a three-month low of 109.02 yen touched three weeks ago.
The dollar's rise against the Japanese currency has been limited as Trump sought to pressure Japan to take measures to reduce its trade surplus with the world's largest economy.
Trump told a news conference with Japanese Prime Minister Shinzo Abe on Monday that he wanted exports to be put on fair footing in Japan through the removal of trade barriers.
Elsewhere in the foreign exchange market, the Australian dollar was up nearly 0.1% at $0.6920 AUD=D4, about 0.8% above a four-month low last touched on Thursday last week.
Bitcoin BTC=BTSP, which on Monday had touched $8,939.18, its highest level in more than a year, was largely unchanged at $8,779.62. The cryptocurrency topped $8,000 for the first time since July 2018 on May 13.
(Editing by Shri Navaratnam)
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