TOKYO - The dollar was pressured in thin Asian trade Thursday following Wall Street's lacklustre performance overnight and signs that Russia and China are seeking to reduce the dominance of the greenback.

The euro gained to $1.3958 in Tokyo morning trade from $1.3943 in New York late Wednesday. The European currency also rose to 133.67 yen from 133.44.

The dollar edged up to 95.77 yen from 95.71.

The dollar's rise was capped after tepid inflation in the United States trimmed market expectations for the Federal Reserve to raise interest rates later this year, wrote NAB Capital strategist John Kyriakopoulos in a note.

The weak May reading for the consumer price index (CPI), which inched up just 0.1 percent from April, was below analyst forecasts of a 0.3 percent rise.

The dollar benefits from its safe haven status amid lower investor risk appetite.

But it reversed its gains on the inflation data, which dampened recent optimism for a year-end recovery, dealers said.

Also weighing on the dollar was news that Russia and China have agreed to boost the use of their domestic currencies in bilateral trade to reduce dependence on the US unit, according to Kyriakopoulos.

Both countries have called for a revamp of the global financial system in the wake of the economic crisis, saying there is a need for a new supranational currency besides the dollar.

Amid a thin economic calendar, investors reverted their focus to President Barack Obama's financial regulation reform plans.

The reforms, which must be approved by Congress, aim to curb Americans' appetite for credit, which contributed to the mortgage meltdown in the United States that ushered in the global economic crisis.

The proposals would give the Federal Reserve expanded powers to oversee regulation on all finance firms or banks that pose a significant systemic risk to the wider financial infrastructure.

The reforms will include the creation of a Consumer Financial Protection Agency to shield Americans from the extremes of credit, savings and mortgage markets.

The regulatory reforms join a massive array of housing, banking, mortgage and credit card reforms, a $787-billion stimulus package and managed auto firm bankruptcies adopted by Obama since taking office in January.