Short-Term Forex Technical Outlook: NZD/JPY

The rise in risk appetite pushed the New Zealand dollar to a fresh yearly high of 63.35 against the Japanese yen earlier this week, and the pair may continue to retrace the sell-off from October as market sentiment improves.

[B]Currency Pair: [/B]NZD/JPY
[B]Chart:[/B] 60 Min Charts
[B]Short-Term Bias:[/B] Flat

[B][U]Analysis[/U][/B]

The rise in risk appetite pushed the New Zealand dollar to a fresh yearly high of 63.35 against the Japanese yen earlier this week, and the pair may continue to retrace the sell-off from October as market sentiment improves. At the same time, a Bloomberg News survey shows that 8 of the 13 economists polled forecast the Reserve Bank of New Zealand to ease policy further this month, and expectations for another rate cut is likely to weigh on the exchange rate as the central bank holds a dovish outlook for inflation. 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 finally break above 60.70-80 (78.6% Fib) this week however, the bearish divergence in the RSI suggests that a short-term correction is underway, and we may see the pair fall lower over the week to retrace the advance from the previous month. Over the next few hours of trading, we may see the kiwi-yen fall back below the 62.00 level to fill-in the gap from the 120 moving average, and a break below this level could lead the pair to test 60.39, the 5/11 high, for short-term support. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.

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