FxWirePro: USD/JPY holds gains above 5-DMA amid souring risk sentiment, BoJ keeps policy steady, revises up inflation forecasts

Chart - Courtesy Trading View 

USD/JPY was trading 0.15% higher on the day at 114.77 at around 05:45 GMT, extending previous session's gains.

At its first policy meet of the year, BoJ left the 10-year yield target and the policy balance rate unchanged at 0.00% and -0.10% respectively.

The central bank cut the 2021 median GDP forecast to 2.8% from 3.4% but raised the 2022 median GDP forecast to 3.8% from 2.9%.

It has left the  2021 core CPI median forecast unchanged at 0.00% but has raised the 2022 core CPI median forecast to 1.1% from 0.9%.

USD/JPY caught a fresh bid after the policy decision and tested highs of 115.05 before paring some gains.

Escalating tensions between Europe and Moscow, over Moscow's huge military build-up on the border with Ukraine dent market sentiment.

Major Support Levels: 

S1: 114.47 (5-DMA)

S2: 114.13 (55-EMA)

S3: 114

Major Resistance Levels: 

R1: 115.03 (200H MA)

R2: 115.85 (Previous week high)

R3: 116

Summary: USD/JPY set to benefit from ongoing risk-off. Price action is currently capped at 200H MA, break above will see further gains.