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New Zealand’s quarterly employment situation update is the event to watch for the next session, making this textbook trend setup on NZD/JPY one to watch!

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Fresh Market Headlines & Economic data:

Upcoming Potential Catalysts on the Forex Calendar:

  • Bank of Canada Governor Poloz speaks in Ottawa at 4:00 pm GMT
  • Australia AIG Manufacturing Index at 11:30 pm GMT
  • New Zealand employment at 11:45 pm GMT
  • Japan Nikkei manufacturing PMI at 1:30 am GMT (May 1)
  • U.K. manufacturing PMI at 9:30 am GMT (May 1)

What to Watch: NZD/JPY

NZD/JPY 1-Hour Forex Chart
NZD/JPY 1-Hour Forex Chart

Cyclopip pointed out a break-and-retest setup on the longer-time frame for NZD/JPY yesterday, and today, would could see that broken support area retested on a potentially strong catalyst from New Zealand. Early in the upcoming Asia session, we’ll get the latest quarterly update on New Zealand’s employment situation and the expectations are mixed with the net growth number to come in at 0.5% vs. 0.1% previous and the unemployment rate to stay inline with the 4.3% previous read.

If you’re a bear on this pair due to the current longer-term downtrend, look out fornegative surprises to the number for a potential short position. If we do see weakness but a bounce higher (buy-the-rumor-sell-the-news), traders are likely to see NZD/JPY as a short play with a potential resistance area between the the 38% Fib (where it recently ran into sellers) and the 61% Fib on the chart above (which lines up with the broken major psychological support level). If the market immediately turns lower, then the potential return-on-risk still looks okay at current levels if using the daily ATR of around 60 pips as the exit points.

For the bulls, it’s gonna take a heck of a good employment update to turn around the current weak sentiment on the Kiwi. But if we do get a combination of lower unemployment, rising wages, and a big net job gain, a long play looks interesting on a break of the recent minor resistance area around 74.50. Again, if using the daily ATR for exits, the next resistance level around 75.00 looks achievable within the next session, but it would be a tough cookie to crack if you’re looking for moves beyond that.