The demise of the kiwi over recent weeks and increased geopolitical tension has sent NZDJPY through an important support zone around its 200-day SMA (NZDUSD has also broken a similar support zone). The pair’s fate hasn’t yet been sealed, but the recent push lower highlights some underlying weakness in price.
From a technical standpoint, daily RSI is firmly in bearish territory and it has already cleared out some orders around 86.00. There are some indicators which suggest that price may be oversold in the medium/long-term, but that may just lead to a period of consolidation trading and doesn’t indicate any real bullish momentum. It’ll be interesting to see if the pair breaks back above its 200-day SMA, which may negate the aforementioned bearish scenario.
Key support levels
- 85.75 – recent low
- 85.55 – 50week SMA
- 84.00/10 – pivot zone
Given that this pair is a proxy for risk sentiment (the kiwi’s commodity status and the yen’s safe haven nature make it vulnerable to negative investor sentiment), it’s worth keeping an eye on geopolitical risk. Also, the recent weak performance of key NZ commodity prices is weighing on the kiwi. If the NZD does start to gain some ground, expect the RBNZ to begin verbally assaulting the commodity currency once again.
Source: FOREX.com
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