The New Zealand Dollar (NZD) is trading bearish against the Japanese Yen (JPY) at 87.386 on Friday, October 27, 2023, following comments from Japan's Chief Cabinet Secretary Taro Matsuno that the Bank of Japan (BoJ) is expected to conduct appropriate monetary policy.
Matsuno's comments come amid rising expectations that the BoJ will eventually tighten monetary policy in response to rising inflation in Japan. The BoJ has been maintaining an ultra-loose monetary policy stance for many years, but this has led to a significant weakening of the JPY in recent months.
The NZDJPY currency pair has been under pressure in recent weeks as investors have priced in the possibility of a more hawkish BoJ. The pair has fallen by over 5% since the start of October.
The bearish outlook for NZDJPY is further supported by the technical outlook. The pair has broken below a key support level at 88.00, and is now on track to test the next support level at 86.50.
Factors Weighing on NZDJPY
There are a number of factors weighing on NZDJPY at present, including:
Expectations of BoJ tightening: The BoJ is expected to be one of the last major central banks to tighten monetary policy, which is putting downward pressure on the JPY.
Rising inflation in Japan: Japan's inflation rate has been rising in recent months, which is putting pressure on the BoJ to tighten monetary policy.
Global risk aversion: Global investors are currently risk averse, which is leading to a sell-off in riskier assets such as the NZD.
Weak New Zealand economic data: The New Zealand economy has been slowing in recent months, which is weighing on the NZD.
Technical Outlook for NZDJPY
The technical outlook for NZDJPY is bearish. The pair has broken below a key support level at 88.00, and is now on track to test the next support level at 86.50. If NZDJPY breaks below 86.50, it could fall to 85.00 or even lower.
Trading Strategy
Traders who are bearish on NZDJPY could consider shorting the pair at current levels. A stop loss could be placed above the recent high at 88.00. A profit target could be placed at 86.50 or 85.00.
It is important to note that the foreign exchange market is volatile and prices can move quickly. Traders should always use risk management techniques when trading currencies.
Matsuno's comments come amid rising expectations that the BoJ will eventually tighten monetary policy in response to rising inflation in Japan. The BoJ has been maintaining an ultra-loose monetary policy stance for many years, but this has led to a significant weakening of the JPY in recent months.
The NZDJPY currency pair has been under pressure in recent weeks as investors have priced in the possibility of a more hawkish BoJ. The pair has fallen by over 5% since the start of October.
The bearish outlook for NZDJPY is further supported by the technical outlook. The pair has broken below a key support level at 88.00, and is now on track to test the next support level at 86.50.
Factors Weighing on NZDJPY
There are a number of factors weighing on NZDJPY at present, including:
Expectations of BoJ tightening: The BoJ is expected to be one of the last major central banks to tighten monetary policy, which is putting downward pressure on the JPY.
Rising inflation in Japan: Japan's inflation rate has been rising in recent months, which is putting pressure on the BoJ to tighten monetary policy.
Global risk aversion: Global investors are currently risk averse, which is leading to a sell-off in riskier assets such as the NZD.
Weak New Zealand economic data: The New Zealand economy has been slowing in recent months, which is weighing on the NZD.
Technical Outlook for NZDJPY
The technical outlook for NZDJPY is bearish. The pair has broken below a key support level at 88.00, and is now on track to test the next support level at 86.50. If NZDJPY breaks below 86.50, it could fall to 85.00 or even lower.
Trading Strategy
Traders who are bearish on NZDJPY could consider shorting the pair at current levels. A stop loss could be placed above the recent high at 88.00. A profit target could be placed at 86.50 or 85.00.
It is important to note that the foreign exchange market is volatile and prices can move quickly. Traders should always use risk management techniques when trading currencies.