The RBNZ was more upbeat than expected in their latest policy statement, creating this potential reversal pattern on NZD/JPY.
Fresh Market Headlines & Economic Data:
- Fed head Powell: U.S. economy is in a good place and performing very well
- Australian Westpac consumer sentiment index rebounded from -1.8% to +2.3%
- RBNZ kept rates on hold at 1.00% as expected, does not forecast a cut this year
- RBNZ: Employment growth at maximum sustainable level, inflation close to 2% midpoint
- RBNZ: Impact of coronavirus to be short-term, growth to accelerate in latter half of 2020
- Increase in number of coronavirus cases lowest since January, Asian stocks stable
Upcoming Potential Catalysts on the Forex Calendar:
- Euro zone industrial production at 10:00 am GMT
- Fed head Powell’s speech at 3:00 pm GMT
What to Watch: NZD/JPYThe Kiwi popped strongly in the earlier trading session after the RBNZ decided to keep rates unchanged and keep an upbeat outlook.
The central bank downplayed the impact of the coronavirus outbreak on the domestic economy while highlighting the improvements in employment and inflation. RBNZ head Orr also hinted that they aren’t likely to cut rates anytime this year.
NZD/JPY is forming a double bottom on its 1-hour chart and is testing the neckline around the 71.00 handle. A break above this resistance level could set off a climb that’s the same height as the chart formation, which is roughly a hundred pips.
Here’s a look at the pair’s average daily volatility to guide you in setting entries and exits: