- NZD/JPY tallied a 2.60% weekly decline, its worst since December 2022.
- On the daily chart, indicators favor the bears in the short term.
- On the four-hour chart, bears stepped out to consolidate their recent movements.
At the end of the week, the NZD/JPY declined to 88.75, seeing nearly 0.25% losses, after reaching a low of around 87.95 at the 100-day Simple Moving Average (SMA).
Overall, the outlook is bearish for the short term, but bulls dominate the larger time frames. The daily Relative Strength Index (RSI) printed a negative slope below 50, while the rising red bars on the Moving Average Convergence Divergence (MACD) indicate that the bears are gaining ground.
Concerning Simple Moving Averages (SMAs), the cross stands below the 20-day average but above the 100-day and 200-day SMAs which indicates that on the broader scale, the bulls are still in command in the broader scale, and as long as the bears fail to conquer those averages their momentum won’t be enough to reverse the overall trend.
Zooming, the four-hour chart indicators flattened in negative territory. The Relative Strength Index (RSI) stands neutral just above the oversold threshold, while the MACD prints flat red bars which suggest that bears seem to be consolidating the recent downward movements.
Support Levels: 88.55, 88.15 (100-day SMA), 87.70.
Resistance Levels: 89.25, 89.80, 90.00 (20-day SMA).
NZD/JPY daily chart
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On Friday, the New Zealand Dollar (NZD) and Japanese Yen (JPY) exchange rate lost its worst week of 2023, with the bears being rejected at the 100-day Simple Moving Average (SMA).
The NZD/JPY fell to its lowest levels since mid-December over the course of the week, dragged lower by risk-off sentiment and weaker-than-expected New Zealand data. The bearish momentum saw the exchange rate testing the 100-day SMA, a key technical level. However, buyers rejected this level, with the NZD/JPY closing at 75.040 on Friday.
Dovish comments from the Federal Reserve to maintain low interest rates and a continued surge in commodities prices buoyed the New Zealand Dollar, while a weaker-than-expected New Zealand manufacturing report and uncertainty surrounding the economic outlook weighed on the currency.
Looking ahead, investors will be closely monitoring the outlook for the global economy and the equity markets. In addition, further positive developments in the US-China trade talks could provide additional support for the NZD/JPY. Also, market sentiment could be further swayed by the US consumer sentiment and inflation data, with any positive developments likely to lend further support to the exchange rate.
Overall, the bears were rejected at the key 100-day SMA this week, suggesting that the decline seen in the NZD/JPY was oversold. However, with the downside risks remaining, there could be further losses potentially in store for the exchange rate over the near-term.