The Japanese yen recently received significant support due to an increase in the demand for safe assets and economic growth in Japan. The yen has strengthened against most currencies. The NZD/JPY currency pair is no exception. After a long uptrend now a new trend has been formed in favor of the JPY.
In the medium term there is a reason to expect further strengthening of the yen as a safe asset with minimal geopolitical risks. Japan's economy will also support the yen at a high level. Recent data on the economy showed a slight slowdown which was expected on the market. In particular, Japan's GDP grew by only 0.1% in the fourth quarter of 2017, which is slightly less than expected. The GDP in the third quarter was +0.6%. It should also be noted that Japan's GDP has been growing for eight consecutive quarters, which confirms the positive dynamic for the Japanese economy.
Prices for the food commodity continue to rise, which provides support to the NZ dollar. In addition, the latest data about the volume of retail sales was positive. Retail sales increased by 1.4% in January, while it was expected to be three times less. The unemployment rate in the fourth quarter was 4.5% and has decreased for the fourth consecutive quarter. The only factor that didn't support the NZD was the decision of the RBNZ to leave interest rates unchanged at a record low of 1.75%, although this was expected by investors.
At the moment there are all the prerequisites for a further trend change to a downward one. Despite a number of positive factors for the NZD, this currency does not have enough factors for further strengthening against JPY. In the medium term, the most optimal would be the deals to sell. At the same time, it is possible to open long deals if you trade in the short term, given that the MACD and Stochastic oscillators confirm the efficiency of such deals.
