The selling is intensifying in USD/JPY after the drop below 135.00 yesterday, which takes out the bottom of the supposed range that the pair has been holding since the start of the month. The yen has been the biggest mover post-FOMC and that comes as no surprise as the bond market comes to life as yields tumble. I warned about that in this post here, noting the key technical levels at play and mentioned that:
"If we are to see a material drop in yields breaking the key levels as highlighted above, expect yen pairs to feel the gravitational force and be weighed lower as well. If this comes as a result of a Fed fail this week, expect that to drag the dollar down as well."
It's tough to fight the mood in USD/JPY now when the bond market is sending a clear signal that yields might very well break down lower. The next key daily target for USD/JPY is the 132.00 mark with the 16 June low at 131.49 also in focus. A break below that will then put the focus back on 130.00 with the 100-day moving average seen nearby currently at 129.95.