The Australian dollar traded up 0.3 percent at $0.7430.
Negative interest rate of -0.1% maintained, but will apply to fewer reserves to cushion the impact on commercial banks.
At the same time, the central bank delivered a range of adjustments created to alleviate strains from negative rates and asset-buying on commercial banks and reduce market distortions.
During the two-day meeting, the BOJ also chose to maintain its short-term interest rate at minus 0.1 percent, but said that it will reduce the amount of funds subject to the rate that financial institutions keep parked at the central bank.
Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo, said investors will be more interested in U.S. GDP data that incorporates July, which is when tariffs against Chinese goods were activated.
Japanese shares pared losses while the yen fell and yields on Japanese and USA bonds declined on Tuesday after the BOJ decision, which stayed away from making drastic changes to its accommodative policy.
The yen fell 0.4 percent to 111.49 per dollar, the weakest in more than a week.
A loose pledge to increase government bond holdings by about 80 trillion yen annually remained, though it added that it will conduct purchases in a "flexible manner".
In a quarterly review of its projections also released on Tuesday, the BOJ trimmed its price forecasts and conceded inflation could fall short of its target for three more years.
The changes, although small, would be the first since 2016 and the latest sign Governor Haruhiko Kuroda is gradually walking away from his radical stimulus program deployed five years ago to shock the public out of a persisting deflationary mindset.
An increase in the number of women and seniors entering the job market and a push by companies to streamline operations through automation are keeping Japan's wages and inflation from rising significantly, the central bank said on Wednesday.
They also cut their forecasts for inflation for fiscal years 2018 to 2020, from 1.3%, 1.8% and 1.8% to 1.1%, 1.5% and 1.6%, respectively.
Asian share markets drifted lower on Monday while currencies kept to familiar ranges at the start of a busy week peppered with central bank meetings, corporate results and updates on USA inflation and payrolls.
"They tried their best to avoid the perception of tapering or normalisation by introducing the forward guidance", said Nagai.
Aside from its yield targets, the BOJ floods markets with cash by buying risky assets such as ETFs and corporate bonds.
U.S. President Donald Trump pays attention to the stock market and if there were a significant sell-off on trade tariff headlines, Smith said, Trump would reverse positions.