Softer-than-expected U.S. housing data flattened the dollar against the yen on Monday, though the greenback held onto gains on consensus that U.S. recovery is gaining steam despite potholes here and there.
In U.S. trading, USD/JPY was up 0.04% and trading at 104.00, up from a session low of 103.87 and off a high of 104.28.
The pair was expected to test support at 103.50, Friday's low, and resistance at 104.28, the session high.
The U.S. Commerce Department reported earlier that U.S. new home sales dropped by 2.4% to 412,000 units last month, confounding expectations for an increase of 5.7% to 430,000.
New home sales in June were revised up to 422,000 units from a previously reported 406,000 units.
Markets shrugged off the report, as last week data revealed that U.S. existing home sales increased 2.4% to 5.15 million units last month from 5.03 million in June. Analysts had expected existing home sales to dip 0.4% to 5.02 million units in July.
Federal Reserve Chair Janet Yellen said last week that the economy is on the mend and the labor market continues to improve, which left markets concluding that stimulus programs will close around October and rate hikes will kick in some time in 2015, possibly sooner than markets were originally anticipating, which supported the greenback.
The yen, meanwhile, was up against the euro and down against the pound, with EUR/JPY down 0.29% at 137.26, and GBP/JPY trading up 0.12% at 172.39.
The euro came under pressure after the Ifo research institute said its German Business Climate Index fell to a more than one-year low of 106.3 this month, missing forecasts for 107.0 and down from 108.0 in July.
The weak data dampened optimism over the health of the euro zone’s largest economy.
On Tuesday, expect markets to move on U.S. durable goods and consumer-confidence data.