As expected, BoJ kept rates at current negative 0.1% with a steady economic projection. The decision was made after a vote by 8-1. As for quarterly outlook, BoJ hinted that the policy of quantitative and qualitative with yield curve control will be extended as the BoJ sees fit till it reaches its 2% aimed inflation target.
Economic projections expected that Core CPI will increase to 1.4% during 2018 fiscal policy and 1.8% during 2019 matching previous forecasts, as Reuters reported. Inflation should tick up to reach 2% level by fiscal 2019, giving a strength for the yen.
Gov. Kuroda stressed that the BOJ aims to sustain the 10-Year government bond yield near zero percent and does not target a specific amount of JGB purchases. In addition to that, Kuroda pointed out that ticking with 2% price target will help stabilize currencies and 2% target is the global standard. Wages and prices move in parallel in Japan and without wages, there's no price rises; vice-versa. Wage growth is needed for sustainable inflation.
As for USD/JPY, the pair has rallied 62-pips during Tuesday's Asian session and clocked 111.16 high, currently flirting with 10-EMA resistance and in case of breaking, next destination will be 20-EMA at 111.60-/+ zone. On the other hand, the buck is currently struggling to keep the slight recovery that has been achieved so far with 90.22 high, still failing to overpass and close above 5-EMA, hinting for more dips after, lowest levels since 2014.
USD/JPY Technical overview:
Closing price: 110.96
Target price: None at the moment.
Resistance levels: 111.04, 111.69, 111.77*
Support levels: 110.45, 109.84, 109.11
Trend: Sideways / Down
Trend reversal price: 111.04*
Comment: The market is still in a short term bull trend, but last Wednesday's reversal signals a negative turn that could yet lead into short term retracements. A close over 111.04* suggests a rally towards to 111.69. Trade may try to inch congestion higher, but a punch under 109.84 is needed to recapture bear forces for a dip to challenge 109.11 support.