Surprising move from the BOJ which, following a Bloomberg news, during the night have discussed the possibility to introduce negative rates on loans (after having already introduced them for the excess reserves at the beginning of the year) and the market already suppose a Bank Lending Facility change, today at 0%.
The Japanese currency immediately drops against the main G10 currencies:
EUR/JPY is trading 124,62 at the moment making a positive performance of 0,86% after an almost 100pips spike and further exacerbated by the recent buying EUR/USD pressure.
Almost the same situation for the USD/JPY cross which is trading 110,31 at the time of writing making a +0,77% performance, after a spike started from 109,35 at the same time of the Bloomberg news. The heavy selling of the Yen is bringing the pair to the 12-days low and the price action seem not to be exhausted yet.
The Yen movement and the high volatility which characterizes the market are supported not just from the BOJ news, but also from the expectations on the monetary policy decisions both by BOJ and Fed scheduled for next weeks.
From a technical point of view, the next significant resistance for the USD/JPY pair is positioned at 111,00 (round number).
On the other hand, if we take a look at the EUR/JPY cross, we can find the next resistance level at 125,00 followed by a round psychological level at 125,55 in which we could se a correction.