A surprise comment emanating from the Bank of Japan (BOJ) shortly after London opened for business this morning sent the JPY up about 1% in a sudden spike against the USD, the Euro and the British Pound within a few minutes of the announcement. The statement indicated that there would be no more monetary stimulus for the Japanese economy, as it would be counter-productive and effectively damaging to confidence as a weaker Yen would endanger consumer sentiment.
However, as the dust settled, the Yen fell again fairly sharply, reaching close to its earlier levels against all the major currencies, and in the case of its cross with the British pound, actually exceeding its earlier low. In its key pairing with the USD, it regained 119.75, after reaching a low of 118.80 from an origin or 120.25.
The strong rebound suggests that the Yen is not going to significantly strengthen any time soon. The Bank's action may be interpreted as a desire to halt the advance of the USD which was showing signs of making a strong breakout above the psychologically key 120.00 level. If this was their intention, they appear to have succeeded in halting the upwards momentum.
The technical picture remains essentially unchanged lower down the chart, with support intact from 119.20 to 119.00. If the price is held below 120.00 for the rest of the week, that will suggest that the Yen can now go on to successfully hold its own against the USD.