CFD Trading Rate New Zealand Dollar vs Japanese Yen (NZDJPY)

• The NZD/JPY trades at 91.567, recording 0.23% losses in Monday's session.
• The RBNZ is expected to continue hiking, leading to a terminal rate of 6% by April.
• Markets are betting on a BoJ liftoff by June.

In Monday's session, the NZD/JPY declined to 91.55 with a slight downtrend of 0.23%. As market participants anticipate diverging strategies between the Reserve Bank of New Zealand (RBNZ) and Bank of Japan (BoJ), NZD/JPY the Kiwi is set for further strengthening as the downside could be explained by investors taking profits and consolidating gains.

The RBNZ Governor Orr appeared before a parliamentary committee and maintained a hawkish stance, signaling that steady inflation at 4.7% YoY is still above the 2% target and hinting that additional tightening may be appropriate. As for now, the odds of a February hike stand at 33% and rose to 65% by May.

In addition, as the New Zealand economic climate remains robust, fueling expectations of a more aggressive central bank policy, the slow economic growth and low inflation in Japan could push BoJ towards further easing and delay a lift until June weakening the pair. Key economic indicators and policy announcements from both banks will likely shape the NZD/JPY pair's dynamics substantially, with market participants eyeing upcoming RBNZ and BoJ meetings.

NZD/JPY technical analysis

The daily chart's Relative Strength Index (RSI) stands in positive territory, marking descending from overbought regions, aligning with a bullish perspective. This downward slope suggests a slight weakening in buying momentum as buyers take profits and consolidate gains. The Moving Average Convergence Divergence (MACD) histogram prints green bars, indicating that buyers are maintaining control over the market direction.

In contrast, the hourly RSI paints a slightly negative territory, as it fell to near its 50 middle points while the hourly MACD histogram, on the other hand, prints declining green bars, indicating a building negative momentum.

Considering the juxtaposition of daily and hourly dynamics, it seems likely that the NZD/JPY pair is following a temporary pullback within a broader bullish trend as it sits above the 20,100,200-day Simple Moving Average (SMA). This suggests a possible dominance of buyers in the larger time frame, despite short-term selling pressure.

NZD/JPY daily chart

• The NZD/JPY rose to 91.05 on Thursday, registering a 0.70% rally.
• The Yen was one of the worst-performing currencies due to dovish BoJ comments.
• On the four-hour chart, overbought conditions suggest a possible correction in the near term.

In Thursday's session, the NZD/JPY staged a rally to land at 91.05, buoyed by steady a softening Yen due to the Bank of Japan’s (BoJ) dovish stance. With the daily chart painting a bullish picture, the pair is tipped in favor of the Kiwi as the pair stands at its highest level since November. However, a potential correction looms on the horizon as the four-hour chart indicators strayed into overbought territory.

In line with that, Deputy Governor Uchida highlighted the unlikelihood of sudden rate hikes which drove markets to bet on a more dovish approach of the BoJ regarding its pivot to a more hawkish policy. For the next sessions, incoming data will be key to dictate the pace of the cross but in case Japan reports negative data, the cross could see further upside as the BoJ won't have incentives to leave its ultra-loose policy.

NZD/JPY technical analysis

The technical indicators on the daily chart reflect bullish dominance. Despite a consolidation looming in the immediate term, the cross is trending above its 20, 100, and 200-day Simple Moving Averages (SMAs), indicative of the buyers' stronghold on larger time frames. The rising slope and placement in the upper region of the Relative Strength Index (RSI) also reinforces the continued bullishness. Moreover, the Moving Average Convergence Divergence (MACD) histogram is demonstrating an uptick with the green bars becoming longer, further empowering the buying momentum.

NZD/JPY daily chart

On the shorter four-hour chart, however, a temporary pullback seems likely. The technical indicators have reached the overbought zone suggesting the possibility of an imminent correction. In this context, the Relative Strength Index (RSI) rose above 70 while the Moving Average Convergence Divergence (MACD) displays rising green bars. Given the intense buying pressure in the shorter time frame, a brief retreat in prices aligns with usual asset behavior after bouts of aggressive purchasing momentum.

• The NZD/JPY currently trades at 90.40 posting a 0.23% uptick on the day.
• The Kiwi found momentum due to strong employment data reported during the Asian session.
• Daily chart indicators suggest a bullish momentum, with RSI on an upward trajectory in the positive zone and MACD depicting lower red bars.
• On the hourly chart, indicators hint at a pause in bullish impulse as they start to flatten in a bid to consolidate recent gains.

In Wednesday's session, the NZD/JPY stabilised at 90.40, after a surge to 90.70 as the pair found traction on the back of promising employment data from New Zealand reported earlier in the session. However, on the hourly chart, investors are moving to consolidate gains so the cross may side-ways trade for the remainder of the session.

The daily chart indicators reflect a noticeable bullish sentiment. The Relative Strength Index (RSI) reveals a strong buying momentum with its positive slope and presence in the positive territory. Additionally, the Moving Average Convergence Divergence (MACD) strengthens this view by presenting lower red bars indicating growing bullish dynamics. Furthermore, the pair sits comfortably above the 20,100,200-day Simple Moving Averages (SMAs), indicating the bulls hold the reins over the larger picture. The scenario highlights the ongoing attempts by the bulls to recapture lost ground after losing nearly 0.70% in the last two weeks.

NZD/JPY daily chart

On the other hand, assessing the shorter timeframe momentum, the hourly chart paints a slightly different picture. Here, the indicators suggest a pause in buying momentum, with investors likely consolidating gains after recent upward movements. The Relative Strength Index (RSI) appears flat, suggesting a standstill in the positive territory suggesting a slight advantage to buyers. Simultaneously, the four-hour Moving Average Convergence Divergence (MACD) displays red bars, suggesting that for the rest of Wednesday’s session, the cross may continue consolidating.