The NZD/JPY bulls remain resolute after forcing a 0.16% upside move on the day. This comes after yesterday’s 0.29% decline, which saw further attempts by the Kiwi Dollar bulls to extend Wednesday’s 0.84% price bounce fail miserably at a key resistance last seen on 5 May and 5 July 2022.
However, as traders prepare to end the week, the pair’s upside move comes on the back of low volumes This scenario means the NZD/JPY could end the week a little more than where it began. The New Zealand Dollar has largely benefitted from a stubborn risk appetite in global markets and a 0.43% growth this week in the Nikkei 225 index, which came with a corresponding decrease in the Yen’s value.
But the NZD/JPY has largely been undermined by the poor employment data released mid-week from New Zealand. There was a lack of job growth, and the unemployment rate increased from 3.2% to 3.3%, providing a disappointing picture of the labour market. Analysts expected to rise by 0.4% with a one percentage point reduction in the unemployment rate.
This situation leaves the Reserve Bank of New Zealand in a challenging position. The quarterly labour market change has declined since it peaked at 2.0% in the November 202i quarter. This could make it difficult to justify raising rates at the RBNZ’s 17 August meeting, which could keep a lid on a further advance on the pair.
The bulls need to build on the bounce of price action on the 83.322 price support and lower edge of the rectangle pattern to test the 84.844 resistance (5 July/4 August highs). A break above this barrier brings 85.742 into the mix as an additional upside target (28 June and 25 July highs). Conversely, if the bulls uncap this barrier, the rectangle’s upper boundary at 86.757 becomes an additional milestone.
The break of the rectangle pattern to the upside makes the 87.851 resistance (3 March 2014 high and 25 May 2015 low) available as a new target for the bulls. Above this level, an additional harvest point for the bulls is seen at 89.724, the site of the 7 July 2014 high.
The contrarian outlook sees the 82.190 support (2 August low) become a new valid target if the bears break down the rectangle’s lower boundary at 83.322 (27 April and 1 August lows). A further decline below this pivot brings in 81.292 (24 May 2022 low) as an additional target. The 15 March and 12 May lows at 79.457 form an additional harvest point to the south if the pair breaks the 80.00 psychological barrier.