USD/JPY advanced to higher levels ahead of FED minutes

US dollar climbed higher against the Japanese yen on Tuesday, as demand for the dollar remained strong ahead of FOMC meeting protocol, which was scheduled for release on Wednesday.

USD/JPY pair reached a session high at 101.30 at 6:04 GMT, after which consolidation followed at 101.06. At 9:51 GMT the cross was trading at 101.20, up by 0.20% for the day. Support was expected at May 31st low, 100.21, while resistance was likely to be encountered at July 8th high and a six-week high, 101.52.

“As the dollar is being bid, the euro is looking heavy,” said Masashi Murata, a currency strategist in Tokyo at Brown Brothers Harriman & Co. “It’s possible the FOMC minutes will provide hints of a reduction in quantitative easing,” Murata said in reference to the Federal Open Market Committee, cited by Bloomberg. The Federal Reserve Bank will release on Wednesday minutes of its June meeting, when Chairman Ben Bernanke said the central bank is likely to scale back its monthly asset purchases later in 2013 and completely exit the program in mid-2014 as long as US economy develops in line with objectives. Bernanke is expected to take a statement on economic policy in Boston tomorrow.

Meanwhile, Bank Of Japan Governor Haruhiko Kuroda and other policymakers will hold a two-day meeting, starting on Wednesday, where main discussion will be upgrading their assessment of Japanese economy. In June they abstained from extending the length of loans they use in order to ease volatility and stuck to intentions from April to expand the monetary base from 60 trillion JPY to 70 trillion JPY per year.

USD/JPY almost ignored the official report, released earlier, which said that Chinese consumer price inflation accelerated in June on annual basis, outstripping initial estimates.

Elsewhere, Japanese yen retreated against the euro, as EUR/JPY cross rose by 0.19% to 130.17.