Investing.com - The U.S. dollar held steady against the Japanese yen on Tuesday, after the Bank of Japan left its monetary policy inchanged and as investors awaited the outcome of the Federal Reserve's monthly meeting on Wednesday.
USD/JPY hit 121.12 during U.S. morning trade, the session low; the pair subsequently consolidated at 121.28.
The pair was likely to find support at 1.20.66, the low of March 12 and resistance at 1.22.02, the high of March 10 and a more than seven-year high.
Earlier Tuesday, the BoJ maintained its stimulus program but cut its inflation outlook, citing temporary declines in oil prices.
Japan's annual core consumer inflation slowed to 0.2% in January, well below the BOJ's 2% target.
However, BoJ Governor Haruhiko Kuroda said lower energy costs may push consumer prices into negative territory but it won't derail a pick-up in inflation as the economy recovers, signaling that he sees no immediate need to expand stimulus.
In the U.S., the Commerce Department said that housing starts declined by 17.0% last month to hit 897,000 units from January’s total of 1.081 million units, worse than expectations for a decline of 2.4% to 1.049 million.
The report also showed that the number of building permits issued last month increased by 3.0% to 1.092 million units from January’s total of 1.060 million. Analysts expected building permits to fall by 0.5% to 1.065 million units in February.
Market participants were now eyeing Wednesday’s Fed statement to see if it would drop its reference to being patient before raising rates and signal that it is ready to hike rates depending on economic data.
The yen was lower against the euro, with EUR/JPY climbing 0.44% to 128.81.
The single currency found support after the ZEW Centre for Economic Research earlier said that its index of German economic sentiment rose by 1.8 points to 54.8 this month from February’s reading of 53.0. Analysts had expected the index to improve by 5.2 points to 58.2 in March.
A separate report showed that euro zone consumer price inflation fell 0.3% last month, in line with expectations and unchanged from a preliminary estimate. Euro zone inflation declined by 0.6% in January.
The rate remains firmly below the European Central Bank's target of near but just below 2%.