The BOJ offered to buy unlimited 10 year Japanese government bonds JGBs at 0.25%, after the 10 year JGB yield went up to a six-year high of 0.245%.
The dollar went to as high as 123.1 yen in morning trade, its strongest since December 2015, and was last at 122.9, up 0.7% on the day. It has climbed nearly 6% on the yen in the last 12 sessions.
The BOJ's action gives the impression that the BOJ remains dovish, and that's leading to a higher dollar-yen, said Shinichiro Kadota, senior currency strategist at Barclays in Tokyo.
In the near term, the risk is still to the upside, especially if the monetary policy divergence story stays intact. He said that the speed has been quite fast and it does seem a bit overheated, so we could see some correction if we see any contrary headlines.
The 10 year Treasuries yield was last 2.5046%, having jumped 33 basis points last week.
High commodity prices are hurting the yen as they contribute to a widening of Japan's trade deficit, but they have also provided a strong impetus to commodity currencies.
The Aussie dollar was at $0.752 at the close of last week's four month high, while the Canadian dollar was at 1.249 per dollar, just off Friday's two month peak.
Aussie currency watchers are looking out for Australia's budget on Tuesday. Australia's Treasurer said on Sunday that the budget would be a very significant improvement to the government's bottom line.
One possible headwind for the Aussie is the COVID 19 situation in China, after Shanghai said on Sunday it would lock down the city to carry out COVID 19 testing.
The dollar climbed as much as 0.24% on the offshore currency to 6.3986 on Monday morning before paring gains.
The euro was at $1.0956 last day, down 0.25%, having edged slightly lower in recent days, still under pressure because of the economic impact of the war in Ukraine.
Analysts at the CBA said that the balance of risks suggests that EURUSD could test 1.0800 in the coming weeks.
The European Central Bank is a bind with growth headwinds and very high inflation, and inflation figures are due to be released from major European economies and the eurozone on Wednesday.
The pound was 0.19% softer at $1.3157. The dollar index was 0.23% higher at 99.079.
The market is already positioned for an aggressive rate hike this year, so it's a possibility that Friday's non-farm payroll data could cause the dollar to go up this week, according to analysts.
After jumping to as high as $47,766 in early trading, it was close to $46,900, its highest level since January. The world's second largest criptocurrency was $3,320.