NZD/JPY Forecast - 21 July 2016

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By: DailyForex.com

The New Zealand dollar initially fell against the Japanese yen during the day on Wednesday, but found enough support near the 74.25 level to turn things around and form a very bullish candle by the end of the day. We broke above the top of the hammer from the previous session, and are now testing the top of the shooting star from the session before that. There are a lot of long wicks just above, but quite frankly this is a market that looks like it is trying to at least go back to the top of what I perceive as the potential trading range. With this, I think that the market could very well reach towards the 76.50 level.

Bank of Japan

The Bank of Japan has been complaining about the exchange rate of the Yen lately, and while they are probably not overly concerned about how it treats against the New Zealand dollar, there is a bit of a knock on effect anytime they intervene or at least talk about it. Because of this, I think the market will very easily move the New Zealand dollar higher, because it is one of the least liquid currencies out of the majors out there, and as a result I feel that if we get a positive move in the yen related pairs, this one should outperform as per usual.

On the other hand, if we break down below the bottom of the hammer, which is extensively the 74 handle, the market would get very soft again and could continue to go lower. At that point in time though, you have to be very cognizant of what’s going on in the USD/JPY pair. That will be the benchmark as to when the Bank of Japan decides to get involved either through quantitative easing, or possible currency intervention although the intervention part of that equation has become less likely of the last couple of weeks.

NZDJPY

Christopher Lewis has been trading Forex for several years. He writes about Forex for many online publications, including his own site, aptly named The Trader Guy.