On Tuesday the greenback held steady against the Japanese yen,
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, at the same time cutting 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.
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.
The US 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 data indicated 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.
Investors are keeping an eye on 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, as the common currency found support from the recent data from Germany.
The index of euro zone economic sentiment touched 13-month high of 62.4 in March from 52.7 in February, above forecasts for a gain to 58.2.
A separate report showed that euro zone consumer price inflation fell 0.3% in February, in line with expectations and up from 0.6% in January. However, the rate remains below the European Central Bank's target of near but just below 2%.
