Investing.com - The dollar fell against the yen on Tuesday after soft U.S. factory orders sparked a round of greenback profit taking, while the battered yen saw demand from bottom fishers who viewed the currency as oversold in wake of fresh Bank of Japan stimulus measures.
In U.S. trading, USD/JPY was down 0.48% at 113.45, up from a session low of 113.18 and off a high of 114.02.
The pair was expected to test support at 112.41, Monday's low, and resistance at 114.22, Monday's high.
U.S. factory orders fell for a second consecutive month in September, dampening optimism over the strength of U.S. recovery, official data revealed earlier.
The U.S. Census Bureau reported earlier that factory orders declined by 0.6% in September, in line with market expectations though still a decline nonetheless.
The August figure was revised to a 10% contraction from an initial 10.1% decline.
The numbers gave investors room to sell the greenback for profits, wiping out gains stemming from divergent monetary policies coupled with upbeat U.S. manufacturing, consumer sentiment and economic growth reports.
Elsewhere in the U.S., the Bureau of Economic Analysis said the country's trade deficit widened to $43.03 billion in September from $39.99 billion in August, whose figure was revised from a previously reported deficit of $40.1 billion.
Analysts had expected the U.S. trade gap to widen to $40.0 billion in September.
The yen, meanwhile, bounced back after investors felt the currency had fallen far enough due to a Bank of Japan decision to raise its monetary base target to an annual increase of ¥80 trillion from ¥60-70 trillion, a preemptive move to steer the economy away from deflationary decline while improving the chances of reaching inflation goals.
Adding to pressure, a Japanese government panel overseeing the Government Pension Investment Fund approved plans on Friday for the fund to raise its holding of foreign stocks to 25% of its portfolio from 12%.
The policy shifts caught many investors off guard and pummeled the yen, though by Tuesday, the currency regained composure against the greenback.
Separately, the yen was down against the euro and up against the pound, with EUR/JPY up 0.08% at 142.42, and GBP/JPY trading down 0.34% at 181.47.
On Wednesday, expect the dollar to move on U.S. service-sector data.