It has been a fairly quiet week for the kiwi, with NZDUSD trading within a slow descending channel. Meanwhile, the yen has lost more ground against the USD dollar and USDJPY is now testing 120.00. The end result for NZDJPY has been fairly neutral as the pair attempts to break through a key resistance zone around 93.50.
From a technical perspective, price action is looking somewhat weak. The pair is constantly being rebuffed by 93.50 and there’s bearish divergence between RSI and price on an hourly chart. This highlights some possible underlying weakness in price action. We have our eyes on an important short-term support zone around 92.60/65, a break of which may precede a drop to 91.85.
Next week sees the release of key Japanese economic data and a policy meeting at the Reserve Bank of New Zealand, with Wheeler expected to hammer the kiwi at the latter. Japan’s final Q3 GDP numbers are due and are expected to improve upon dismal preliminary figures. Seasonally adjust GDP is expected to fall 0.1% q/q and annualised GDP is expected to fall 0.4% q/q, which is significantly better than preliminary readings of -0.4% q/q and -1.6% q/q respectively. This could reduce some downward pressure on the yen. Yet, if the numbers fail to improve it may trigger another bout of yen weakness.
Source: FOREX.com
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