NZD/JPY Faces Selling Pressure Ahead of RBNZ Meeting
Market Overview
The NZD/JPY pair has been under consistent selling pressure over the past two sessions as traders position themselves ahead of the Reserve Bank of New Zealand’s (RBNZ) rate decision. Market expectations suggest the central bank is likely to cut interest rates by 50 basis points, bringing the official cash rate down to 3.75%. This dovish stance has weighed on the New Zealand dollar, increasing selling momentum in the pair.
Meanwhile, the Japanese yen has gained strength due to renewed safe-haven demand, particularly as concerns over global economic conditions persist. Additionally, Japan’s trade balance report, scheduled for release later today, is expected to show a widening deficit, primarily driven by higher import growth outpacing exports.
Technical Analysis
NZD/JPY has been in a short-term downtrend, with sellers extending their control as the pair approaches key support levels. The price has already tested 86.617, a critical level that buyers have attempted to defend. A break below this support would confirm further bearish continuation, opening the door for declines towards 86.545.
If selling momentum persists, the next downside targets would be 86.453, 86.352, and ultimately 86.188. The RSI remains in bearish territory, reflecting continued downward pressure, while the MACD histogram extends further into negative territory, confirming the dominance of sellers.
However, if buyers manage to regain control, a rebound towards 86.718 and 86.882 is possible. A break above these levels would invalidate the current bearish bias and shift the momentum in favor of buyers.
Key Technical Levels
- Resistance Levels: 86.718, 86.882
- Support Levels: 86.617, 86.545, 86.453, 86.352, 86.188
Fundamental Drivers
- RBNZ Interest Rate Decision: The central bank is widely expected to cut rates by 50 basis points, reinforcing a dovish stance that may further weaken the NZD.
- Japan Trade Balance Report: The trade balance is expected to show a larger deficit, potentially impacting yen strength if import growth outpaces exports significantly.
- RBNZ Press Conference: Governor Adrian Orr’s commentary will be closely monitored for future monetary policy guidance, potentially triggering volatility in NZD pairs.
- New Zealand Producer Price Inflation: Scheduled for release later tonight, this data could provide additional insights into inflationary pressures in the economy.
Conclusion
NZD/JPY remains under strong selling pressure, with sellers targeting a break below 86.617 to extend losses toward 86.188. The RBNZ’s rate decision and Governor Orr’s remarks will be the primary market-moving factors, potentially dictating the pair’s short-term trajectory.
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