The uptrend of the NZD/JPY continues. Over the past few weeks the New Zealand dollar has strengthened against the yen and other basic currencies. Still, the NZD has been rising not due to any outstanding economic growth in New Zealand, nor due to rising food prices. It's rising mainly based on the uncertain political and economic situation in the United States and the United Kingdom. In any case, the New Zealand dollar managed to reach its highest level in several years. The NZD cost more in January-June 2015 only.
The main factor against the JPY this week was the decision of the Bank of Japan to leave interest rates unchanged. In addition, the Bank of Japan decreased inflation expectations and said that the inflation target will be reached a year later than previously expected. The market also received data about the trade balance which amounted to 440 billion yen in June but didn't reach the forecasted 485 billion level. The burden on the trade balance is growing, given that the level of imports increased by 15% and exports only by 9.7%. Yet these indicators exceeded investors' expectations, showing a general increase in business activity.
Since the beginning of the month the rates of the NZD/JPY have consolidated in the range 82.2-83.1 JPY. The peak has likely been reached. This means we can expect the price correction to be a minimum or the beginning of the flat trend. The stochastic oscillator indicates that the rates currently continue in the overbought zone. In this situation in medium-term trading the most effective approach would be to open deals to SELL. Entry points can also be specified at the levels 83.1 and 82.2 JPY, the achievement of which would mean either a completion or a continuation of the current trend.
