Investing.com - The dollar held steady against the yen on Wednesday, coming off earlier highs as investors flocked to the sidelines ahead of the Federal Reserve's statement on monetary policy due out later in the session.
In U.S. trading, USD/JPY was up 0.03% and trading at 102.18, up from a session low of 102.05 and off a high of 102.31.
The pair was expected to test support at 101.72, Monday's low, and resistance at 102.65, the high from June 9.
Investors waited for the Fed to announce its latest monetary policy decision followed by a press conference with Fed Chair Janet Yellen.
The U.S. central bank was expected to cut its bond-buying program by another $10 billion to $35 billion, and investors were also awaiting indications on the future path of interest rates.
While many investors expect the Fed to wind down its bond-buying program this year, the time frame between when that stimulus program ends and when benchmark interest rates rise remains up in the air.
Data on Tuesday revealed that U.S. consumer prices rose 0.4% from a month earlier in May, bringing the annual rate of inflation to 2.1%. It was the fastest monthly increase in inflation in more than a year, beating forecasts of 0.2%.
The uptick in inflation indicated that the economic recovery may be gaining steam and boosted expectations for a more hawkish stance on monetary policy from the Fed, though uncertainty softened the dollar somewhat.
Earlier this week, the International Monetary Fund cut its U.S. 2014 growth forecast to 2% from 2.8% due to rough winter weather and slackness in the housing market.
Meanwhile, data on Wednesday showed that the U.S. current account deficit widened to $111.2 billion in the first quarter of this year, the largest in 18 months. Exports fell by 1.3% during the quarter, while imports rose by 1.5%.
The yen, meanwhile, was down against the euro and up against the pound, with EUR/JPY up 0.19% at 138.64, and GBP/JPY trading down 0.05% at 173.19.
On Thursday, the U.S. is to publish the weekly report on initial jobless claims as well as a report on manufacturing activity in the Philadelphia region.