Forex - Dollar edges higher versus yen

Investing.com - The dollar edged higher against the yen on Tuesday but gains looked likely to remain limited after a senior Federal Reserve official defended the central bank’s decision to keep its stimulus program unchanged last week.

USD/JPY hit 99.00 during late Asian trade, the session high; the pair subsequently consolidated at 98.99, edging up 0.14%.

The pair was likely to find support at 98.44, the low of September 16 and resistance at 99.61, the high of September 19.

The dollar remained under pressure after New York Federal Reserve President William Dudley said Monday that the pace of the U.S. economic recovery remains insufficient for the bank to start scaling back its stimulus program.

Dudley said that adjustments to the Fed’s USD85 billion-a-month asset purchase program "need to be anchored in an assessment of how the economy is actually performing”.

The Fed said last week that it wanted to see more evidence of a sustained economic recovery before it adjusted the scale of its bond buying program. The decision surprised markets, which had been expecting a modest reduction to the bank’s stimulus program.

Elsewhere, the yen was slightly lower against the euro, with EUR/JPY easing up 0.13% to 133.57.

Sentiment on the single currency remained fragile after European Central Bank President Mario Draghi said Monday the bank is ready to inject further liquidity into the region’s banking sector if needed, in order to safeguard the bloc’s recovery.

The comments came after data showed that manufacturing output in the euro zone was weaker than expected this month, but this was offset by an improvement in service sector activity.