That's a big move for just a tweak on yield curve control policy but I reckon it is also in part that traders are preparing for a bigger pivot of sorts from the BOJ after the latest move today. It is a sign of a change in times for Japan's central bank and that could result in a massive unwinding of the run lower in the currency during the course of the year.
USD/JPY is now down over 3% to 132.70 levels, its lowest level in four months. If you go by the chart, there isn't much stopping the downside push until we get towards the 16 June and early August lows around 131.49 roughly. The 2 August low stands at 130.39 but both levels could very much be anecdotal, with the 130.00 mark arguably the next key level to be wary of.
In terms of momentum, you have to look back to January 2021 for the pair to be trading well below both its 100 and 200-day moving averages. As such, sellers are firmly in control now and if the BOJ is only starting to be hawkish when everyone else is at the sunset stage of tightening policy, the yen could be a massive beneficiary in the next couple of months at least.
