The Japanese central bank's policy meeting in the Asian session this morning saw interest rate results maintained at -0.10% as expected.
However, there was a surprise that made the market shake a little while ago so that the chart paired with the yen currency such as USD/JPY, EUR/JPY and GBP/JPY exhibited drastic movements.
What exactly happened?
Bank of Japan (BOJ) Governor Haruhiko Kuroda surprised the market when he announced an adjustment to the yield curve control program where he allowed the Japanese 10-year bond yield to be increased to 0.5% from the previous limit of 0.25%.
This surprising decision is seen to have the potential to impact the global market which will drive low lending rates around the world.
After the results of the meeting, the value of the Yen soared to reach a 4-month high against the US dollar, a 12-week high against the Euro and a 10-week high against the Pound.
If observed on the chart of the currency pair USD/JPY, the price started trading slowly in the Asian session with a flat before making an increase to the 137.00 concentration zone.
The yen traded weak following market risk-on sentiment with reports of giant technology firms resuming operations in China following the easing of movement restrictions.
However, the atmosphere changed worse this morning (Tuesday) when investors saw the price plummet from the 137.00 zone to the 133.00 level.
The drastic drop in prices is also seen to have surpassed the lowest level reached in early December at the same time setting the latest 4-month low.
Although the momentum slowed as trading continued into the early European session, the decline is still continuing and is expected to test the concentration zone at 132.00.
A further drop in price is likely to reach 130.00 to record the latest price low.
If the price increases again, the initial resistance is seen to be tested at around 133.700 before continuing the climb towards the 135.00 zone.
The price reaction in the zone will be evaluated by investors for an indication of further movement.
