The Kiwi-Yen continued to advance this week following the surge in risk appetite however, as the results of the U.S. bank stress test are expected to reinforce a dour outlook for the banking sector, strains in the global financial system are likely to weigh on market sentiment over the near-term.
[B]Currency Pair: [/B]NZD/JPY
[B]Chart:[/B] 60 Min Charts
[B]Short-Term Bias:[/B] Flat
[B][U]Analysis[/U][/B]
The Kiwi-Yen continued to advance this week following the surge in risk appetite however, as the results of the U.S. bank stress test are expected to reinforce a dour outlook for the banking sector, strains in the global financial system are likely to weigh on market sentiment over the near-term. After reaching a high of 65.32 in October, the NZD/JPY slipped to a low of 44.23 in February and we’ve seen the pair attempt to retrace the sell-off in April, but the lack of momentum to push above 60.70-800 (78.6% Fib) paired with the dovish comments from the Reserve Bank of New Zealand is likely to drag the exchange rate lower over the month. Over the next few hours of trading, we are likely to see the kiwi-yen attempt to push back below the 120 SMA however, we might see the pair hold a tight range as the RSI approaches oversold territory. Meanwhile, as the OECD and the IMF call for the RBNZ to ease policy further in an effort to shore up the $128B economy, Governor Alan Bollard may continue to hold a dovish policy stance and may lower the benchmark interest rate further next month as the outlook for growth and inflation falter. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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