The Japanese yen surged higher against its major currency counterparts this week following the drop in market sentiment, and the low-yielding currency may continue advance over the following week as investors curb their appetite for high risk/reward investments.
Currency Pair: NZD/JPY
Chart: 60 Min Charts
Short-Term Bias: Flat
Analysis
The Japanese yen surged higher against its major currency counterparts this week following the drop in market sentiment, and the low-yielding currency may continue advance over the following week as investors curb their appetite for high risk/reward investments. After reaching a high of 65.32 in October, the NZD/JPY slipped to a low of 44.23 in February, but the lack of momentum to push back above 60.70-800 (78.6% Fib) paired with expectations for a 50bp rate cut by the Reserve Bank of New Zealand next week is likely to weigh on the exchange rate over the remainder of the week. As a result, we are likely to see the kiwi-yen push lower over the next few hours of trading, and may make a run for 52.20-30 (38.2% Fib) however, as the RSI approaches oversold territory, we may see the pair attempt to retrace the sell-off from the beginning of the week. Nevertheless, as the OECD calls for the RBNZ to lower the benchmark interest rate to 2.00% from 3.00%, expectations for further easing is likely to weigh on the high-yielding currency, and if Governor Alan Bollard signals that the central bank has room to lower borrowing costs further, we could see the NZD/JPY retrace the sell-off from March over the near-term. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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