Headline and core inflation eased but by quite a bit less than expected. Headline inflation fell to 2.2%, from 2.6% in December but was expected to hit 1.9%. With price growth expected to pick up again in the coming months, these data support expectations that the BoJ will reverse its key policy rate from negative in the not-too-distant future. 

USD/JPY is just about holding the uptrend in place since the end of last year but may be vulnerable to downward pressure, given the considerable buildup of JPY short positioning evident via the IMM data in the past few weeks. Key short-term support is 149.55. 

JPY gains would add to the generally softer undertone that is still developing around a somewhat overvalued USD generally after the DXY’s mid-February peak around 105.00.