USD/JPY approaches 109.00 as Yen tumbles

• Yen weakens across the board during London fix and as Wall Street extends gains. 
• USD/JPY extends rally that started from 107.15, eyes July highs. 

The USD/JPY pair broke a tight intraday trading range above 108.65 and jumped to 108.89, reaching the highest level since July 10. As of writing is hovering near the highs, looking at July highs and the 109.00 area, a strong resistance zone. 

The move higher was driven by a decline of the yen across the board during the London fix. US yields remained relatively steady while the DOW JONES hit fresh highs, it is up 0.25%. 

Early on Tuesday, the Bank of Japan (BoJ) will announce its decision on monetary policy. According to analysts at ANZ, the BoJ “faces a triple dilemma: inflation is still far from its goal; other major central banks are easing; and its current framework is counterproductive when growth is slowing and yields are falling. Despite mounting pressure to do something, we do not expect any notable policy announcement”. The point out that a key dynamic for BoJ policymakers is the JPY. “Any notable policy action from the central bank is likely to be triggered by a stronger currency. For now, we expect the BoJ to be watchful of global FX moves.”

Regarding the greenback, the FOMC will start tomorrow it's 2-day meeting. On Wednesday a rate cut announcement is expected. Over the last days, the US Dollar gained momentum as traders market participants eased expectations of aggressive cuts.