NZDJPY Slides for five days in a row eyes 75.00

• New Zealand’s economic outlook looks bright, according to Westpac Analysts.
• ANZ Analysts remark if market sentiment remains upbeat, the pair could breach 78.00.

The NZD/JPY edged lower on the session for the fifth day in a row. Nevertheless, for the second day in a row, the pair was not able to break support at 75.25.

Despite the downward pressure on the pair, the outlook for the New Zealand dollar is positive. The RBNZ finished its bond purchase program in the last month, so the monetary policy normalization in New Zealand is underway. Contrarily, in Japan, the BoJ kept their interest rates at -0.10%, on risks that economic activity will be under downward pressure from the spread of covid-19 and inflation levels remain well-anchored below the 2% target.

Westpac’s comments regarding, New Zealand dollar strength:

“Multi-month, the NZD is supported by the NZ economy’s expected strength over the remainder of this year, the RBNZ’s signaled rate hikes,”

“Westpac expects that the RBNZ’s Q3 Survey of inflation expectations will continue to push higher this quarter (Q2 was 2.05%). The latest survey comes hot on the heels of the much stronger than expected June quarter inflation result. Recent months have also seen firm indications for domestic activity and widespread reports of growing cost pressures.”

Remarks from ANZ about the pair:

“Positive risk sentiment helped push it higher. Currently sitting around the 100-day moving average, if it’s able to get above this, it could get up to 78.

Support 72.30/75.30/76.00 Resistance 78.00/78.65/80.20”

NZDJPY technical outlook

The pair is at 75.50. The moving averages remain well above 76.39 with the 50-day moving average in between the 100 and the 200-DMA. The medium-term trend remains tilted to the downside, however, for the second day in a row, sellers failed to break support at 75.25. This signals that buyers could be entering the market at that price, so while the downward trend remains in place, a close underneath 75.25 is needed for follow-through. On the other hand, the buyers need the pair to trade above 76.00. This is psychological support that confluences with the 78.6 Fibo retracement. The next resistance up will be the 200-DMA at 76.39, followed by the 77.00.

RSI is at 37.55 and headed toward oversold levels, while the Average True Range (ATR) is 63 pips and headed south.