The yen retreated after the BOJ stressed in its monthly economic report released on Monday on the fragility of economic recovery as it predicts industrial output to fall in the quarter through June on weaker Asian demand.
The BOJ has also warned there is “high uncertainty” regarding its projection that output will rebound in the third quarter.
On the upside, BOJ Governor Haruhiko Kuroda said the bank has many tools to push inflation higher towards its 2 percent target.
The USDJPY is meanwhile trading around 123.29 after finding support near the session’s low at 122.54.
The dollar rebounded after posting its second straight weekly decline last week, after the Fed had hinted to slower rise interest rates.
Investors will focus on U.S. existing home sales, which may signal sales rose 4.8 percent to a seasonally adjusted annual rate of 5.28 million homes in May.
It is important to note that the Fed has linked its monetary policy stance to the improvement or deterioration in economic data.
The USDJPY rose on the 4-hour chart where support at 122.45 remains critical, yet the Parabolic SAR provides negative sign.
The momentum from the RSI 14 buoyed the rise as it topped the 50-center line.
The pair may face resistance as it approaches 123.42, which if breached could send the pair higher towards 123.90.