The NZD/JPY pair has been very strong over the last month, and there is nothing on this weekly chart that suggests that it will continue to be. In fact, towards the end of March it broke out again, and it appears that we are heading to the 90 handle in short order. The question then becomes whether or not we can break above that level, but quite frankly I see no reason why we won’t.
The New Zealand dollar itself has been rather strong in general, so the fact that it would be beating up on the Japanese yen really isn’t that big of a surprise, as it offers the best yield of the major JPY pairs. Going forward, I would think that any pullback should be a buying opportunity, even though the one at the 90 level might be a little more significant, ultimately this pair should continue to go higher.
Buying on the dips.
I personally believe that the Japanese yen is going to continue to get sold off overall, and this is one of those pairs where you could really take advantage of the interest-rate differential and continue to buy strengthen sell weakness. I don’t think that it’s a one-way trade per se, but I believe that every time this market pulls back there will be people interested in going long simply because of the interest-rate differential and the fact that this pair does tend to move rather rapidly.
It really isn’t until we break down below the 85 level that I would be concerned about the uptrend, and based upon the attitude of the market, I don’t think that we are going to go anywhere near that level anytime soon. With that being the case, I’m very bullish of this market, and at first would target 90, and would be fully comfortable even targeting 95, given enough time. Obviously I’d think that it’s going to take some time to get to that level, and although it probably won’t happen in April, I bet it’ll happen sometime during this summer as this uptrend continues to heat up.
