Investing.com - The dollar rose against the yen on Tuesday after the Bank of Japan boosted bank lending capacity to steer the country away from deflationary pressures.
In U.S. trading, USD/JPY was up 0.41% and trading at 102.35, up from a session low of 101.79 and off a high of 102.75.
The pair was expected to test support at 101.39, Monday's low, and resistance at 102.94, the high from Jan. 31.
The yen weakened against the dollar and other currencies on Tuesday after the Bank of Japan decided to double part of a growth lending program at its monthly policy meeting, and said individual banks could borrow twice as much as previously under a second facility, in an attempt to boost the effectiveness of its monetary stimulus program.
The dollar, however, saw headwinds of its own.
The Federal Reserve Bank of New York said that its general business conditions index came in at 4.48 for February, down from a 20-month high of 12.51 in January. Analysts had expected the index to decline to 9.00.
The new orders index fell to zero from a two-year high of 11 last month.
The numbers were the latest in a series of soft U.S. economic indicators that have prompted many investors to wonder whether the Federal Reserve will slow the pace of reductions to its asset-buying stimulus program.
The Fed is currently buying USD65 billion in Treasury holdings and mortgage debt a month to suppress interest rates to spur recovery, which weakens the dollar as a side effect.
The yen, meanwhile, was down against the euro and down against the pound, with EUR/JPY up 0.76% at 140.76, and GBP/JPY trading up 0.30% at 170.86.
On Wednesday, the U.S. is to publish reports on building permits, housing starts and producer price inflation.
Meanwhile, the Federal Reserve is to publish the minutes of its most recent policy setting meeting.