Risk-on flows stemming from easing banking sector fears led to another round of losses for the yen.
Can NZD/JPY resume its rally after pulling back?
Before moving on, ICYMI, yesterday’s watchlist checked a trend reversal setup on USD/JPY after a breakout. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
U.S. pending home sales rose 0.8% m/m in February vs. estimated 2.9% slump and previous 8.1% increase, chalking up third consecutive monthly gainEIA crude oil inventories unexpectedly fell by 7.5 million barrels vs. projected 1.8 million increase and earlier 1.1 million buildup, suggesting stronger demand
New Zealand ANZ business confidence index dipped from -43.3 to -43.4 in March, as inflation indicators inched slightly lower
Australia’s trade union body submitted proposal for 7% minimum wage increase, although only 5% hike is expected in June
Spanish flash CPI slipped from 6.0% y/y to 3.3% in March vs. estimated 3.9% reading, as electricity and fuel prices erased gains from previous year
Price Action News
The lower-yielding yen continued its descent against its major forex peers in the U.S. trading session, before paring some losses during the early Asian hours.
The lack of negative headlines on the banking sector seems to be the culprit for the safe-haven currency’s decline, as traders eased up on their risk-off holdings.
Most major currencies remained stuck in ranges for the most part of the session since data was light, but the yen looked ready to resume its slide later in the day.
Upcoming Potential Catalysts on the Economic Calendar:
U.S. final GDP reading at 12:30 pm GMT
U.S. initial jobless claims at 12:30 pm GMT
U.S. Treasury Secretary Yellen’s speech at 7:45 pm GMT
Tokyo core CPI at 11:30 pm GMT
Japanese preliminary industrial production and retail sales data at 11:50 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
A return in risk-taking helped lift NZD/JPY to the top of its short-term ascending channel visible on the 15-min time frame.
But will the channel resistance keep gains in check?If so, the pair could dip back to the bottom of its channel around the 82.50 minor psychological mark and pivot point, which might attract bullish interest.
A larger correction could take the pair down to the rising trend line that’s been holding over the last couple of days. Support could be found right around the 82.00 major psychological level near S1 (82.04).
Do note that New Zealand reported a slight dip in its business conditions, dragged lower by weakness in inflation data, so the Kiwi might have trouble sustaining its climb without pulling back.
Then again, another surge in risk appetite could allow NZD/JPY to bust through the channel top and go for a test of the next upside barriers at R1 (83.05) and R2 (83.38).