Investing.com - The dollar dropped against the yen on Wednesday as investors remained in safe-haven positions in the Japanese currency ahead of the Federal Reserve's statement on U.S. interest rates and monetary policy later in the day.
In U.S. trading, USD/JPY was down 0.73% and trading at 102.18, up from a session low of 102.00 and off a high of 103.45.
The pair was expected to test support at 101.78, the low from Jan. 16, and resistance at 104.84, Thursday's high.
The Federal Reserve will release its statement on monetary policy and interest rates later, and markets were betting that months of broad improvements to U.S. economic indicators will prompt monetary authorities to trim USD10 billion from its USD75 billion bond-buying program.
The program, launched in September of 2012, originally started out at USD85 billion in monthly purchases of Treasury holdings and mortgage debt a month.
Fed asset purchases seek to spur recovery by holding down long-term interest rates, which weakens the dollar as a side effect.
Still, investors favored the yen over the greenback ahead of the Fed announcement.
The yen also saw demand from investors seeking safe harbor from ongoing emerging-market turmoil.
The yen, meanwhile, was up against the euro and up against the pound, with EUR/JPY down 0.80% at 139.60, and GBP/JPY trading down 0.86% at 169.20.
On Thursday, the U.S. is to publish preliminary data on fourth-quarter economic growth. The nation is also to release the weekly report on initial jobless claims and data on pending home sales.
Japan is to produce official data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.