The yen weakened on Tuesday after the Bank of Japan (BOJ) stuck to its dovish stance in a keenly-awaited policy decision, disappointing speculators who had expected the central bank to start tightening its ultra-loose monetary policy settings.
At the conclusion of its two-day policy meeting, the BOJ said that it would maintain its target of around 0% for its 10-year government bond under its yield control programme, though changed the language around the 1% yield cap to a "reference" cap.
That sent the yen sliding nearly 0.7% against the dollar JPY=EBS , past the 150 per dollar threshold to hit an intraday low of 150.12, before steadying to 149.93 per dollar.
The euro similarly jumped roughly 0.5% against the yen following the decision EURJPY=EBS . The single currency last bought 158.87 yen.
A Nikkei report had said on Monday that the BOJ could potentially allow 10-year Japanese government bond yields to rise above 1%, which had propped up the yen prior to the central bank's policy announcement.
In other currencies, the greenback edged broadly higher, with the dollar index =USD last up 0.24% at 106.41.
While the index looked set to end the month largely unchanged, analysts say the dollar remains underpinned by risks of another rate hike from the Federal Reserve, noting a still-resilient U.S. economy.
"The Fed can still have the luxury of sounding hawkish in its outlook, by stressing the 'high for long' narrative," said Thierry Wizman, Macquarie's global FX and interest rates strategist, of the Fed's rate decision due later this week.
"As long as that's still the case, and as long as the U.S. economy displays more robustness in its official data than the rest of the world does, the euro, sterling, yen and Australian dollar will have a tough go at appreciating vs the U.S. dollar."
The euro EUR=EBS looked set to reverse two straight months of losses with a slight 0.2% gain for October, with the single currency last steady at $1.05925.
Data on Monday showed inflation in Germany eased noticeably in October, while a separate report showed Europe's largest economy shrank slightly in the third quarter.
Spain's 12-month inflation in October was unchanged from the previous month at 3.5%, preliminary data also out on Monday showed.
The figures come ahead of euro zone inflation data due later on Tuesday.
Sterling GBP=D3 fell 0.21% to $1.2142 and was poised to lose 0.5% for the month, ahead of an interest rate decision by the Bank of England later in the week where expectations are for the central bank to stand pat.
Elsewhere, the Australian dollar AUD=D3 slid 0.42% to $0.6347 and was headed for a monthly loss of more than 1%.
The New Zealand dollar NZD=D3 lost 0.22% to stand at $0.5831 and was set for a nearly 3% decline for October, pressured by fragile risk sentiment globally and as a surprisingly low reading of domestic inflation in the third quarter lessened the chance of another rate hike.
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