Forex - USD/JPY falls as market awaits fresh cues from Federal Reserve

The dollar fell against the yen on Tuesday as investors avoided the greenback on the day before the release of the Federal Reserve's minutes from its July policy meeting.

Investors were hoping Fed language will reveal when the U.S. central bank will begin to taper its USD85 billion in monthly asset purchases, which have kept the U.S. currency weaker to spur recovery.

In U.S. trading on Tuesday, USD/JPY was trading at 97.24, down 0.33%, up from a session low of 96.92 and off a high of 97.87.

The pair was likely to find resistance at 98.12, Monday's high, and support at 97.36, Monday's low.

Hit-or-miss economic indicators over the past several weeks have fueled uncertainty as to when the Fed will announce plans to scale back stimulus tools, with solid dating prompting investors to trade on a September start to tapering and weaker data sparking others to bet on a December start date.

Trading was quiet on Tuesday, as most investors remained camped out in safe-haven yen positions to await the release of the Fed minutes on Wednesday.

Elsewhere, the Federal Reserve Bank of Chicago’s national activity index for July came in at -0.15 from a revised -0.23 in June, though the number came in much worse than market expectations for a -0.10.

The data weakened the dollar by keeping expectations alive for many that the Federal Reserve will begin tapering stimulus tools in December as opposed to September.

The yen, meanwhile, was up against the pound and down against the euro, with GBP/JPY down 0.19% and trading at 152.40 and EUR/JPYtrading up 0.29% at 130.48.