Two-Way Risks in NZDJPY
The current price action in NZDJPY is drawing attention and offers good opportunities either side of the market. Following a solid rally off the 2020 lows, the bullish move has lost momentum for now with price correcting from highs of 79.19 to recent lows of 75.63, just ahead of a test of the bullish trend line from 2020 lows.
For now, the focus is still on a break higher, in line with the longer-term trend with bulls looking to target 81.53 next on q move above the 79.19 level. NZD was boosted today by the RBNZ’s unchanged monetary policy decision overnight.
However, with JPY rising steadily on Japanese COVID concerns, there is ample room for a downside break in the pair to clear out stops within the bull community. A break of 75.63, and the rising trend line, should see 73.66 quickly tested. If 75.63 then holds as resistance, this could pave the way for a broader reversal.
Key Data to Watch
With the RBNZ decision out of the way and no key Japanese data to watch, the moves are likely to be far more linked to broad risk appetite. The current upside in global stocks looks supportive for now though tensions between the US and Russia could see a sharp reversal on any headlines suggesting an escalation. Later in the week the NZD business manufacturing index could offer some movement on a surprise reading while Chinese GDP will also be on watch given its importance to risk sentiment.
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