Forex: USD/JPY holding at 89.00 on BoJ digestion

FXstreet.com (Barcelona) - The BoJ monetary policy announcement allowed a first rally to 90.13 as officials lifted the inflation target from 1% to 2%, but disappointment showed up as investors noticed that the BOJ only forecasts an inflation rate of 0.9% in FY2014/15, and the the open-ended asset purchase program by BoJ is only scheduled from January 2014.

Japan's Leading Economic Index eased from 92.8 to 92.1 in November. The Coincident Index fell from 90.7 to 90.2. All Industry Activity index contracted by -0.3%, as expected. The USD/JPY is currently testing the 89.00 handle for support, and has printed its daily low at 88.90.

“A move above 90.25/26 is needed to reassert upside pressure, while capped here a slide back to the up trends remains feasible”, wrote Commerzbank analyst Karen Jones.

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