By Daniel Leussink
TOKYO, May 28 (Reuters) - The dollar rose against its major peers on Tuesday as investors awaited new trading 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 by two officials from the currency bloc 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 0.2% to 97.804 .DXY, trading about 0.6% off a two-year high of 98.371 hit on Thursday. The index is still up 1.7% for the year.
The euro slipped 0.1% to $1.1182 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 eurosceptic opponents saw strong gains.
"There is a polarisation 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 greenback dipped 0.1% to 109.46 yen JPY=, 0.4% 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 said on Monday he expected the two countries to be "announcing some things, probably in August, that will be very good for both countries" on trade.
Japan's Economy Minister Toshimitsu Motegi said on Tuesday the U.S. President's comment probably reflected his hope for quick progress in negotiations.
"While it's positive that there will be time for solving the U.S.-Japan trade issue, that doesn't mean the problem has been has been resolved," said Kumiko Ishikawa, senior analyst at Sony Financial Holdings. "(But) it's providing some relief."
Ishikawa said it remained hard for investors to take on risk due to the yet-to-be-resolved trade negotiations between the United States and China.
Elsewhere in the foreign exchange market, the Australian dollar edged up to $0.6919 AUD=D4, about 0.75% 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 last up 0.15% at $8,783.11. The cryptocurrency topped $8,000 for the first time since July 2018 on May 13.
(Editing by Shri Navaratnam and Sam Holmes)
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