NZD/JPY is testing the top of the rising wedge on the daily forex time frame, giving a countertrend forex trading setup for Kiwi bears. The wedge has formed for almost a year already and it’s likely that the top will hold, given the downturn in risk appetite these days.
A selloff from the top of the rising range pattern could last until the bottom of the wedge, which is located at the 84.50 minor psychological level. Take note that a short-term head and shoulders pattern can be seen but the pair has yet to break below that formation’s neckline around the 88.00 major psychological handle.
Forex Trading Forecast for NZD/JPY
Data from New Zealand has been more or less stable while Japan’s recent economic figures have shown strong results. The preliminary GDP reading for the first quarter of the year showed 1.5% growth, higher than estimates, while the tertiary industry index printed a 2.4% increase as expected.
It remains to be seen though how the latest sales tax hike in Japan could impact economic figures, although the BOJ and the government have emphasized that they’re willing to adopt measures such as corporate tax cuts to make up for the potential slack. In terms of forex trading biases, the path of least resistance for this pair is to the downside.
The conflict in Ukraine is still weighing on overall risk sentiment, not just in the forex trading market, but in all financial markets. France and Germany have threatened to impose more sanctions on Russia if they prevent the Ukrainian elections from taking place as planned. Further conflict could weigh on global economic performance, which might lead to losses for the higher-yielding forex trading currencies like the New Zealand dollar.
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