Investing.com - The dollar rose but later gave back its gains against the yen on Monday after soft U.S. housing data steered investors away from the greenback, though expectations still remained firm that the Federal Reserve remains on course to continue scaling back stimulus measures at a policy meeting this week.
In U.S. trading, USD/JPY was down 0.12% and trading at 102.22, up from a session low of 101.78 and off a high of 102.94.
The pair was expected to test support at 101.62, the low from Dec. 5, and resistance at 104.84, Thursday's high.
The Federal Reserve will conclude a monetary policy meeting on Wednesday, and investors remained bullish on the greenback amid expectations that monetary authorities will make fresh cuts to its USD75 billion in monthly bond purchases due to several months of improving economic indicators.
Stimulus tools such as Fed purchases of Treasury holdings and mortgage debt suppress interest rates to spur recovery, thus weakening the dollar as long as they remain in effect, while talk of tapering the program strengthens the U.S. currency.
The greenback rose against the yen earlier though soft U.S. housing data prompted a pause in the greenback's gains.
The Census Bureau reported earlier that sales of new, single-family houses in December came in at a seasonally adjusted annual rate of 414,000, missing market calls for a 475,000 reading and also below November's revised figure of 445,000, which softened the dollar slightly.
The figure was still well above the December 2012 reading of 396,000, and the data also revealed that inventories remain lean and prices continue rising, which muted the report's impacts on the dollar.
Harsh winter weather may have affected sales in December as well.
The yen, meanwhile, was flat against the euro and down against the pound, with EUR/JPY unchanged at 139.97, and GBP/JPY trading up 0.62% at 169.69.
On Tuesday, the U.S. is to release data on durable goods orders, a leading indicator of production, as well as what will be a closely watch report on consumer confidence.