The relief valve for last week's frenzied trading was the Bank of Japan decision on Friday. It was a week where it felt like anything was possible after the Fed 75 bps hike and the surprise 50 bps from the Swiss National Bank.
But Kuroda and the BOJ kept their hand steady, leaving policy unchanged. The yen had rallied more than 200 pips on nerves ahead of the decision but gave it all back afterwards. That momentum is continuing today as all major global currencies make gains against the yen as Tokyo begins the trading week. Risk sentiment is also positive with S&P 500 futures up 25 points.
With that, USD/JPY is up 32 pips to 135.27. That puts it within striking distance of last Tuesday's 24-year high of 135.60. If that level gives way it will accelerate yen selling and we could see a rapid squeeze higher as we chew into that late-90s top of 147.63.
Note too that the US is closed for a holiday today so liquidity will be thin.