I am very bearish this pair.
From a daily technical view, we have a major double top / shoulder head shoulder, call it what you want. Now the neckline of this multimonth sideway movement was clearly broken yesterday, a small consolidation and retest is currently underway. Resistance Zone to watch 85.80 - 85.40.
Now my scenario for the future movement is that we are going to break the ascending line, and while it may take some time 81.50 is coming.
Fundamentally spoken, there is not alot of reason to buy NZD, we have the RBNZ intervening to weaken the currency. Now exactly this is what is going to get the "carry trade" in this pair head to the exit. Its a tough environment with volatility raising to stay calm for a carry trader. Data out of New Zealand is not very ambitious, we are having alot of weaker readings, and further rate raises are being postponed because inflation is sinking so there is currently no obvious reason to raise rates further nor to be hawkish as a central bank.
Now there is the JPY, its a little bit complicated. We have a had a huge depreciation in the JPY in the last 2 months, even domestic politicans are putting this depreciation in question because it can hurt the economy to have such a weak JPY. Today a statement of Prime Minister Abe caught my eye:
Also the Japanese Data Flow from tonight is showing several positive signs from unemployment to retail sales, we also had some weaker readings in Household Spending but politicans are not very eager to push for further easing measures.
as a example Japans finance minister Aso:
Now this does not sound to me, like somebody who is urging the BOJ to take further easing steps.
Further to add we have the turmoil in HongKong and several geopolitical risks (IS vs Turkey etc.) that are upcoming and could spark some Risk Off mood that would be mostly reflected in a weaker NzdJpy.
For this fundamental and technical reasons i have entered a sell position at 85.40 Stop is placed at 86.40 i will add some lots to my position if we approach 85.70 and my first target is 84.00 afterwards if this level is hit i will adjust my stop to BE, and if fundamentals are still in my favour i will target 81.50.
Good Luck.
From a daily technical view, we have a major double top / shoulder head shoulder, call it what you want. Now the neckline of this multimonth sideway movement was clearly broken yesterday, a small consolidation and retest is currently underway. Resistance Zone to watch 85.80 - 85.40.
Now my scenario for the future movement is that we are going to break the ascending line, and while it may take some time 81.50 is coming.
Fundamentally spoken, there is not alot of reason to buy NZD, we have the RBNZ intervening to weaken the currency. Now exactly this is what is going to get the "carry trade" in this pair head to the exit. Its a tough environment with volatility raising to stay calm for a carry trader. Data out of New Zealand is not very ambitious, we are having alot of weaker readings, and further rate raises are being postponed because inflation is sinking so there is currently no obvious reason to raise rates further nor to be hawkish as a central bank.
Now there is the JPY, its a little bit complicated. We have a had a huge depreciation in the JPY in the last 2 months, even domestic politicans are putting this depreciation in question because it can hurt the economy to have such a weak JPY. Today a statement of Prime Minister Abe caught my eye:
QuoteDislikedJapan’s Abe says GPIF reform isn’t aimed at boosting asset prices but may boost the economy
Also the Japanese Data Flow from tonight is showing several positive signs from unemployment to retail sales, we also had some weaker readings in Household Spending but politicans are not very eager to push for further easing measures.
as a example Japans finance minister Aso:
QuoteDisliked
- Job market conditions steadily improving
- Decline in August household consumption is due to bad weather, pick up trend continuing
- Does not see economic fundamentals weakening
Further to add we have the turmoil in HongKong and several geopolitical risks (IS vs Turkey etc.) that are upcoming and could spark some Risk Off mood that would be mostly reflected in a weaker NzdJpy.
For this fundamental and technical reasons i have entered a sell position at 85.40 Stop is placed at 86.40 i will add some lots to my position if we approach 85.70 and my first target is 84.00 afterwards if this level is hit i will adjust my stop to BE, and if fundamentals are still in my favour i will target 81.50.
Good Luck.
consistency wins