USD/JPY peeps above 112.00, BOJ pushes back timing for hitting 2% CPI target

The Dollar-Yen pair clocked a session high of 112.12 after the Bank of Japan (BOJ) held key rates unchanged and boosted the economic outlook. 

The central bank also revised its inflation forecasts lower as expected and pushed back the timing for hitting the 2% inflation target. The bank now sees inflation reaching 2% around the fiscal year 2019. 

Core CPI forecast revised lower

Core CPI is seen at 1.5% in 2018/19 as opposed to 1.7% projected in April. The 2019/20 forecast has been revised lower to 1.8% from 1.9%. In its quarterly report, the bank says “the recent moves in CPI have been relatively weak and the central bank will make policy adjustments as appropriate with view to maintaining momentum towards achieving the price target”. 

The commentary on inflation could be the one capping gains in the USD/JPY pair.

USD/JPY Technical Levels

A break above 112.23 (5-DMA) would open up upside towards 112.73 (July 4 low) and 112.93 (June 29 high). On the downside, breach of support at 112.00 would expose 111.78 (200-DMA) and 111.65 (50% Fib R of 108.80-114.49).