NZDJPY broke past the long-term resistance at the 78.00 handle a couple of months back before staging a steady ascent to 83.50. Price seems to be struggling to keep up its climb from here so a pullback might be due.
Applying the Fib tool on the latest swing high and low shows that the 61.8% retracement level lines up with the broken range resistance, which might now hold as support. The 100 SMA just crossed above the longer-term 200 SMA to indicate that the path of least resistance is to the upside and that the uptrend could resume at some point.
Stochastic is still heading lower so price could follow suit. However, the oscillator is already dipping into the oversold area so sellers might need to take a break and let buyers take over. Once stochastic turns up from the oversold area, bullish pressure could be revived.
Economic data from Japan all came in weaker than expected, signaling that the BOJ might need to ramp up its stimulus efforts in order to boost growth and inflation. Household spending sank 1.5% on a year-over-year basis instead of posting the projected 0.2% uptick while the unemployment rate rose from 3.0% to 3.1%.
Deflation is still a concern in Japan, with the Tokyo national core CPI printing a 0.6% drop versus the projected 0.4% decline in price levels. National core CPI is down 0.4% versus the estimated 0.3% dip. The BOJ core CPI and Japanese housing starts data are lined up next.
In contrast, New Zealand recently printed a stronger than expected GDP figure of 1.1% versus the 0.8% consensus. However, tensions in the Asian region between China and Taiwan are currently dampening investor sentiment for commodities.
By Kate Curtis from Trader’s Way