Giles Coghlan LLB, Lth, MA
HYCM
Despite the recent risk-off trading is the NZDJPY ready for gains? The risk to this trade is obvious. If the new variant is a major concern then that should continue to weigh on the NZDJPY pair. However, if the variant is found to be not a threat then NZDJPY could offer some value.
The basic story is that yield differentials should support further NZDJPY gains. It is simply a case of pairing strength against weakness The RBNZ have the highest cash rate among major central banks and look set to increase rates further. The RBNZ see the official cash rate at 0.94% in March 2022 (vs 0.86% previously, 2.14% in December 2022(1.62%), and 2.30% in March 2023 (previously 1.77%). That’s the positive news.
In contrast, the BoJ is not expected to raise interest rates any time soon. In fact, some people are hoping that the JPY carry trade is back and an extended period of JPY weakness could be ahead. The BoJ is certainly expected to stay on hold with rates for the foreseeable future.
Price is around key support on the daily chart and this seems a decent enough area for some good support. The NZDJPY needed to have a pullback to offer some support for medium-term buyers to stick with it. This area looks pretty solid and the 200EMA just above 77.50 should provide a final line of defence.
Don’t forget the seasonals
The seasonals are very solid for the NZDJPY pair. A deeper pullback is a great opportunity with tech, fundamentals, and seasonals all combined. The pair has an 85% winning streak over the last 21 years. Tax-loss selling higher tends to weaken the JPY and the NZD looks oversold now post the RBNZ rate meeting. They are, after all, set on a hiking spree for the foreseeable future.
High Risk Investment Warning: Contracts for Difference (‘CFDs’) are complex financial products that are traded on margin. Trading CFDs carries a high degree of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent expert advice if necessary and speculate only with funds that you can afford to lose. Please think carefully whether such trading suits you, taking into consideration all the relevant circumstances as well as your personal resources. We do not recommend clients posting their entire account balance to meet margin requirements. Clients can minimise their level of exposure by requesting a change in leverage limit. For more information please refer to HYCM’s Risk Disclosure.
Recommended Content
Editors’ Picks
AUD/USD: Bulls firming to test critical 0.71 the figure that guards a much stronger correction
There is a battle going on between the bulls and bears surrounding the Aussie and the US dollar. Bulls are testing the neckline near the current levels at 0.71 the figure. A break here will leave the bulls in good stead for a break of resistance around 0.7135.
EUR/USD: Bulls jostle with nearby resistance with eyes on 1.0770
EUR/USD pares intraday gains around 1.0700 while stepping back from an immediate resistance line. The major currency pair reverses the previous day’s pullback from the monthly high during Thursday’s Asian session.
Gold bears taking on the bulls towards critical hourly support
The price of gold is under a little bit of pressure in Asia as the US dollar attempts to stabilise. The gold price is down 0.07% and is sticking to a range of between 41,851.63/$1,854.43 so far. Gold struggled to find a bid amid the weak economic backdrop.
What needs to happen for Axie Infinity price to recover
Axie Infinity price displays reasons to believe in further momentum to the upside. Traders should approach the digital asset with relative caution, looking for one more fake-out before the rally occurs. Axie Infinity price appears to be unfolding as an extended impulse wave down.
FXStreet Premium users exceed expectations
_XtraSmall.png)
Tap into our 20 years Forex trading experience and get ahead of the markets. Maximize our actionable content, be part of our community, and chat with our experts. Join FXStreet Premium today!