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NZD/JPY Forms Double-Top Amid RBNZ, BOJ Divergence

The NZD/JPY price moved sideways on Friday morning as investors reacted to the latest New Zealand trade numbers and Japan inflation data. It was trading at 85, where it has been in the past few days. The price is about 3.46% from the lowest level this year. 

New Zealand trade and Japan inflation

The NZD to JPY exchange rate exchange rate moved sideways after the latest New Zealand trade numbers. According to the country’s statistics agency, imports rose from $7.3 billion in June to over $7.7 billion in July. In the same period, exports rose from $6.3 billion to over $6.68 billion. As a result, New Zealand’s trade deficit dropped to about $1 billion.

These numbers came two days after the Reserve Bank of New Zealand (RBNZ) decided to hike interest rates by 0.50%. The bank also hinted that it will continue hiking interest rates in the coming months. 

The NZD/JPY price also moved sideways after the latest Japan inflation data. The headline inflation rose from 0.0% in June to 0.5% in July. This increase translated to a year-on-year increase of 2.6%. Core CPI rose to 2.4%. This inflation happened as the price of oil and gas jumped and as the Japanese yen retreated slightly.

Still, Japan’s inflation is sharply below that of other countries. As a result, the divergence between the BoJ and the RBNZ will continue. The BoJ has hinted that it will maintain interest rates low in a bid to stimulate the economy. 

NZD/JPY forecast

The four-hour char shows that the NZDJPY price rose to a high of 86.25 on August 12. It then dropped sharply and is trading at 85. This price is along the 25-day and 50-day moving averages while the Awesome Oscillator moved below the neutral point.

A closer look shows that it has formed a double-top pattern at 86. Therefore, the outlook for the pair is bearish, with the next key support level being at 84. A move above the resistance at 85 will invalidate the bearish view.