A flurry of events is causing the yen to fluctuate rather aggressively, while the dollar is reacting to another rate hike.

The USD/JPY is on the run early on Thursday after several sharp twists and turns over the past couple of weeks. The American greenback slipped today to levels near ¥134.15. Just two days ago, it had rocketed to a high of ¥137.78 as the Japanese yen dealt with domestic woes.

So what’s the deal(making) all about? On the one hand, Japan’s central bank kept interest rates flat in its latest meeting. The decision had a negative effect on the yen, prompting a surge in the USD/JPY. So much so that the exchange rate shot up more than 400 pips, or 3%, in two days.

On the other end, there’s the US dollar trying to sort itself out. The US Federal Reserve just hiked interest rates by another 25 bps yesterday. What threw forex traders, however, was the Fed’s dim outlook – no rate cuts are planned, but also no more lifts are projected for 2023.