The dollar eased against the yen as US-led forces braced for the possibility of dangerous urban warfare in the streets of Baghdad as the war in Iraq entered its 15th day, dealers said.

News that US troops were as close as 30-40 kilometres (19-25 miles) from the Iraqi capital had revived interest in the dollar after days of negative reports about the allied forces' progress in the Gulf.

However, the buying ran out of steam as investors struggled to interpret reports from the battlefield, as well as the outlook for the US and global economies after the fighting has ended.