BoJ decided to keep its notorious interest rates at -0.1% and kept its yield curve control unchanged. The dollar took a tumble.

• The USDJPY pair downshifted its rapid rise for a third straight day on Tuesday as early-week dealmaking picked up momentum. The exchange rate has retreated roughly 180 pips from its Friday peak of ¥148.80 as traders reacted to the Bank of Japan’s two-day meeting which wrapped up on Tuesday.

• Japan’s central bank said it has decided to maintain its notorious negative interest rate at -0.1%. What’s more, it stuck to its yield curve control policy with a 1%-as-a-reference yield cap to the 10-year government bond. Policymakers also trimmed core inflation forecast to 2.4%, down from an October call of 2.8%.

• But it wasn’t the Bank of Japan’s commitment to support its policy which triggered a selloff reaction in the USDJPY. It was the market’s view that Japan will abandon its negative rates regime as early as April. Presently, Japan is the only country to allow negative interest rates and this approach has been suppressing the yen for years.