The New Zealand dollar tumbled lower against the Japanese yen this week following the drop in risk appetite, and the NZD/JPY may continue to trend lower over throughout the second-half of the year as market participants weigh the outlook for global growth.
[B]Currency Pair:[/B] NZD/JPY
[B]Chart:[/B] 60 Min Charts
[B]Short-Term Bias:[/B] Flat
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[B][U]Analysis[/U][/B]
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The New Zealand dollar tumbled lower against the Japanese yen this week following the drop in risk appetite, and the NZD/JPY may continue to trend lower over throughout the second-half of the year as market participants weigh the outlook for global growth. After reaching a high of 74.59 on 9/8, the kiwi-yen slid to a low of 44.23 in February following as investors turned risk aversion, but the rebound in market sentiment during the first half of the year has helped to drive demands for carry trades, and the pair may attempt to push higher over the near-term as investors anticipate the Reserve Bank of New Zealand to keep a floor on the benchmark interest rate. However, as the downturn in the global economy intensifies, fears of a protracted recession is likely to hamper the outlook for future growth, and the Japanese yen may continue to strengthen against its higher-yielding counterparts as it benefits from safe-haven flows. Over the next few hours of trading, falling equity and commodity prices may drag the kiwi-yen lower throughout the Asian trade however, as the RSI approaches oversold territory, we may see the pair push back above 59.40-50 (50.0% Fib) to work its way towards 60.59 to cover the gap from the 120 moving average. Nevertheless, as the NZD/JPY tests the 50.0% Fib for short-term support, we may see the pair continue to trade within its current range over the month as investors mull over the prospects for future policy. Be sure to check out other Technical Reports from DailyFX for additional information on the major currency pairs.
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