Expectations for a 50bp rate cut by the Reserve Bank of New Zealand later today is likely to weigh on the NZDJPY over the next few hours of trading, and as market participants expect the $128B economy to face its worst economic slump in nearly two-decades, the central bank is likely to continue its easing cycle throughout the first half of the year, which should hold the pair within the downward trend over the near-term.
[B]Currency Pair:[/B] NZD/JPY
[B]Chart: [/B]60 Min Charts
[B]Short-Term Bias:[/B] Bearish
[B][U]Analysis[/U][/B]
Expectations for a 50bp rate cut by the Reserve Bank of New Zealand later today is likely to weigh on the NZDJPY over the next few hours of trading, and as market participants expect the $128B economy to face its worst economic slump in nearly two-decades, the central bank is likely to continue its easing cycle throughout the first half of the year, which should hold the pair within the downward trend over the near-term. After reaching a high of 56.32 in January, the kiwi-yen slipped to an eight-year low of 44.24 during the first week of February, and as investors expect the RBNZ to lower the benchmark interest rate further in the months ahead, we may see the pair test the 2/2 low this week as Governor Alan Bollard is expected to hold a dour outlook for growth and inflation. Over the next few hours of trading, I expect the pair to fall lower to cross below 48.80-90 (38.2% Fib), and we may the NZDJPY attempt to retrace the rally from the February low over the remainder of the week as market participants continue to raise bets for further easing. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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