Since the beginning of the year the rates of the NZD/JPY have continued in the frames of a rapid downtrend. However, the situation began to change and the current trend is under threat to be replaced by something else. To be more specific, we can actually trace a new upward trend on the chart. It is too early to speak about the final change, but the probability remains high. Both the support and the resistance lines have been removed. Though, if the resistance line shifted in the downward direction, the support line can be reversed up.
So, why has the trend begun to change its direction? In the beginning of the month the Japanese yen came under pressure because of geopolitical tensions on the Korean Peninsula. This conflict can exacerbate at any moment and Japan could be involved. As a result, the yen has lost positions against most currencies. Amid the geopolitical risks for Japan, the New Zealand dollar has been supported by positive data about the retail volume which rose in the first quarter of 2017 by 1.5% against the forecasted 0.9%. It was the sharpest increase in retail trade since the second quarter of 2016. In addition, the number of tourists in April continues to grow, increasing by 20% year on year. The strengthening of the NZD is also influenced by the rising commodity prices, including oil.
Nevertheless, the Japanese yen managed to take the initiative again due to yesterday's data about the Japanese economy. Japan's GDP for the first quarter of 2017 increased by 0.5%, coinciding with the forecasts of investors. The year on year increase was 2.2% against the forecasted 1.7%. In addition, for a second month in a row orders for machinery have increased, although investors expected more than actual +1.4% growth.
At the moment the value of the NZD is consolidated in the range of 76.7-77.1 JPY. These levels are good entry points for the market. Right now the most optimal course of action would be the deals to BUY, considering that today the market is expecting data about the milk price index. It will be published soon and it can support the NZD in the short term. The MACD and RSI oscillators confirm this and also signal a good moment for opening the deals to BUY. As for the medium-term trading, next week we'll get data about the trade balance and export volumes both from Japan and New Zealand. Overall, both currencies can get support and go up in price.
