TOKYO (AFX-ASIA) - The dollar was slightly higher against the yen in cautious midafternoon trade ahead of the Federal Open Market Committee meeting tonight and the Bank of Japan's release of its Tankan survey outcome tomorrow, dealers said. They said the dollar failed to reach the 126.00 yen level, pressured by exporter selling of the US unit as well as profit-taking. "Currently, most market participants are short-term investors. It seems the dollar is being pressured by profit-taking as well as exporter selling in afternoon trade here," a dealer at a local Japanese trust bank said. However, he said the current strong trend of the dollar against the yen has not changed, adding that the dollar will continue trying to test the 126.00 level. "After breaching the 126.00 level, I think the dollar will continue to test the upside, possibly at the 126.84 level, the highest level reached so far this year," he said. The dealer added that he does not expect any major forex market movements in the event that the FOMC decides tonight, as widely expected, to cut rates by 25 basis points. "It is widely expected that the FOMC will decide to cut rates by 25 basis points. I can not think of any other possible move," he said. "A 25-basis-point rate cut has already been digested by the market. I don't think the rate cut will prompt any major movement in the forex market." The dealer said investors are also awaiting tomorrow's Tankan survey outcome. "If the Tankan outcome is worse than expected, I think the yen will continue to fall further." The dealer added that at the BoJ's next meeting scheduled for next week, central bank purchases of foreign government bonds will likely be discussed. "I think (State Minister for Economic and Fiscal Policy Heizo) Takenaka will be present at the meeting. It is highly possible that the issue of foreign government bond purchases will be discussed," he said. Takenaka earlier said he wants the BoJ to take on the challenge of considering a new monetary policy, adding that a proposal for the central bank to buy foreign bonds might be possible without introducing an undesirable bias into the foreign exchange market. The dealer said he expects the yen will also perform weakly against the euro in the near term, but added that the yen will find strong support at around the 112.00/euro level. "I think the yen will also perform weakly against the euro. But because of current yen-short positions against the euro, I think the yen will be supported well at around the 112.00 level," he added.