The New Zealand dollar has strengthened throughout May, and the high-yielding currency may continue to benefit from the rise in market sentiment however, expectations for a 25bp rate cut by the Reserve Bank of New Zealand is likely to weigh on the exchange rate over the remainder of the month.
Currency Pair: NZD/JPY
Chart: 60 Min Charts
Short-Term Bias: Flat
Analysis
The New Zealand dollar has strengthened throughout May, and the high-yielding currency may continue to benefit from the rise in market sentiment however, expectations for a 25bp rate cut by the Reserve Bank of New Zealand is likely to weigh on the exchange rate over the remainder of the month. After reaching a high of 65.32 in October, the kiwi-yen slipped to a low of 44.23 in February and we’ve seen the pair make another attempt to break above 60.70-80 (78.6% Fib), but the lack of momentum to retrace the sell-off from the previous year could keep the pair within a broad range over the near-term. Over the next few hours of trading, we may see the NZD/JPY cross back below 57.20-30 (61.8% Fib) to fill-in the gap from the 120 SMA, and a break below the moving average may lead the pair to retrace the six-day rally from the beginning of the month. Meanwhile, a Bloomberg News survey shows 6 of the 13 economists polled forecast the RBNZ to lower the benchmark interest rate by 25bp to 2.25%, and the central bank may continue to ease policy further throughout the second half of the year as the region faces a deepening recession. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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