The USD/JPY currency pair hit its four-month low of 132.00 in the European session. The pair has gained a few pips in the last hour, ranging between 132.70 and 132.75.

After the BoJ stunned markets by modifying its yield curve management policy, the USD/JPY plummeted. The Japanese central bank unexpectedly changed 10-year government bond yields. The Japanese Yen is actively acquired when the Bank of Japan’s ultra-loose monetary policy ends.

The yen gained from ballooning recession fears, sending the USD/JPY pair to fall. Chinese COVID-19 also sparked concerns among investors, followed by geopolitical dangers that make individuals nervous about a global economic slowdown and less risk-taking.

Last week, the Fed was more “hawkish,” but the US dollar remains unpopular. The US central bank believed a 75 bps rate hike in 2023 would crush inflation. It raises Treasury bond yields but disappoints greenback bulls.

The daily dip marks a new breach below a theoretically critical 200-day SMA and strengthens the downtrend. The hourly oversold RSI (14) reduces bearish trades. The USD/JPY pair finds support near 132.00, but a significant bounce doesn’t appear likely.

Market participants await US Housing Starts and Building Permits data. Statistics may not affect the USD or USD/JPY.

Conclusion

As we’ve seen, spot prices move down quickly and up attempts are sold into.