Global factors, plus an unwinding of pricing for a 50bp RBNZ hike, have weighed on Kiwi Dollar. Weighing on the NZD recently have been a risk-averse global backdrop, a stronger US dollar reflecting a normalizing Fed, and an expectation the first RBNZ rate hike will be 25bp rather than 50bp. The US Federal Reserve’s (Fed) inability to clarify the tapering timeline and rate lift, not forget revising down the 2021 GDP forecast, weighed on the US Treasury yields and the US Dollar Index (DXY) before Chairman Jerome Powell surprised markets with his hawkish style. The Fed Boss Powell not only hints at the positive conditions matching for the consolidation of the asset purchase but also signaled the start of taper as soon as the next meeting, even if on good employment data not needing too strong figures. Additionally, China Communist Party’s (CCP) deal with the struggling real-estate player Evergrande to avoid default and safeguard the monetary system follows the People’s Bank of China’s (PBOC) heavy liquidity injection also favor the market sentiment.

BULLISH AND BEARISH CONDITIONS/ POSSIBILITIES :

On the technical side New Zealand Dollar has taken advantage of Japanese Yens weakness after the pair failed to break below the 61.8% fibb retracement zone i.e 75.86 and Kiwi Dollar uplifted the pair towards 78.0 resistance. NZDJPY was supported by exponential moving average 200 in daily time frame and provided an upthrust to the pair above 76.60, this move developed hawkish sentiments and pulled the pair towards 61.8% fibo level on our daily chart/ levels. Currently NZDJPY is hovering below 78.0 major price action and resistance zone, a breakout above would further open doors for gains towards 78.50 - 79.20. We are bullish on NZDJPY above 75.80 support zone, a breakout below would force the pair with dovish stance and rally at 75.30 - 74.53. 

NZDJPY

Sep 23 2021