USD/JPY tumbles by more than 4.5%, tests 131.00

• Yens keeps rising across the board after Bank of Japan’s surprise. 
• USD/JPY drops by more than 4% on Tuesday. 
• US dollar mixed across the board, on risk appetite. 

The USD/JPY dropped even further during the American session and bottomed at 131.00, the lowest intraday level since August 2. It remains near the low, falling more than 550 pips or 4.15%. 

The pair is headed toward the lowest daily close since June with the Yen having one of the biggest daily gains across the board boosted by the decision of the Bank of Japan to raise the upper banks of its yield curve control of the 10-year bond from 0.25% to 0.50%. 

BoJ breaks market correlation? 

It was a small change from the BoJ but market participants are seen a lot more. The impact of the announcement shows that a more significant policy shift could take place much sooner than expected.

Until a few hours ago, higher US yields meant a weaker Japanese Yen and bearish pressure for gold. The Japanese Yen is having the best day in years across the board and Gold prices are at weekly highs. 

Main indexes in Wall Street are now positive for the day, not affected by higher US yields. Back in the old days, prior to the wide divergence between the Federal Reserve and the BoJ monetary policy, higher yields were normal at times of optimism in the equity market, reflecting money going out of safer assets, looking for higher returns. 

Technical levels