• USD/JPY pulls back sharply after rejection just below 129.50.
• Profit-taking, Japan’s exporters' sales and BOJ’s operation weigh on the spot.
• Fed/BOJ policy divergence will remain in play, eyes on Fed’s Beige book.

Having failed to sustain the bounce above 129.00, USD/JPY is on a free fall to test the 128.00 level, down over a big figure in the last hour.

 The sharp correction in the pair from 20-year peaks of 129.40 comes after heavy Japanese exporters' offers came through at 129.50, as reported by Reuters.

Additionally, investors resorted to profit-taking after the yen plunged these days against the US dollar. Presumed option barriers at 129.50 also prompted the corrective pullback in the major.

Meanwhile, the BOJ’s bond market intervention could be also partly attributed to the spot’s downward spiral.

The BOJ announced earlier on, it will conduct an unlimited fixed-rate purchase operation for Japanese Government Bonds (JGBs) after the yields hit the central bank’s upper cap at 0.25%.   

The downside in the pair, however, could be seen as a good ‘buy the dip’ trade, as the Fed-BOJ monetary policy divergence will continue to favor the US Treasury yields, in turn, the dollar against the yen.

Markets now look forward to the US Housing data and the Fed’s Beige Book for fresh trading opportunities. Thursday’s speech by Fed Chair Jerome Powell at the IMF Spring event will be eagerly awaited.

USD/JPY: Technical levels to consider