Yen Selling Reprieve as Market Awaits Key BOJ Decision
Market participants are waiting to find out if the BOJ (Bank of Japan) is going to deliver on its word following months of speculation around future policies. The central bank is widely expected to introduce additional easing measures, with an aim of boosting the nation's economy, as it wraps up its latest meeting on Tuesday.
The BOJ, has been under sustained pressure from policy makers to deal with deflationary issues and provide a much needed boost for the world's third biggest economy.
The recent high momentum upside move for the US dollar/Japanese yen currency pair (USDJPY) hit a 2-1/2 year peak of 90.25 during the Asian FX trading session on Monday. The US dollar has recently seen a 10% increase versus the Japanese yen.
The euro is likewise trading at a significant recent gain versus the JPY and moved strongly through the key 120.00 level before retracing somewhat.
The recent Forex price action has been dominated by this major shift in sentiment towards the JPY, which was previously seen as a so called "safe haven" currency.
Speculators are now trying to weigh up whether the extended JPY selling is priced in already - for now - or whether additional yen selling will once again be the overriding theme going forward. This could potentially be the case if the BOJ commits to an open-ended asset purchase programme.