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NZD/JPY Collapses On Muted Reserve Bank Of New Zealand And New COVID Fears

By TickmillMarket OverviewNov 26, 2021 05:40AM ET
www.investing.com/analysis/nzdjpy-collapses-on-muted-reserve-bank-of-new-zealand-and-new-covid-fears-200609621
NZD/JPY Collapses On Muted Reserve Bank Of New Zealand And New COVID Fears
By Tickmill   |  Nov 26, 2021 05:40AM ET
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RBNZ Disappoints Bulls

The RBNZ meeting this week was a highly anticipated event given the hawkish expectations heading into the event. The market had fully priced in a .25% hike, fuelled by recent data strength and hawkish RBNZ commentary, with additional pricing showing a 40% probability of a more considerable hike.

However, bulls were left disappointed as the bank only hiked by the well-expected .25%. Although the accompanying rate-path projections were lifted, the policy adjustments this time around were not enough to drive NZD higher.

New COVID Strain Hits Risk Assets, Drives JPY Higher

News late in the week of the emergence of a new strain of COVID, located first in Botswana, which is more contagious and lethal than all other strains and, so far, it seems, resistant to vaccines and antibodies. While it is very early days and more tests are needed on the strain, the initial results raise fears of a fresh global wave of the pandemic.

Many countries are now placing travel restrictions on South Africa in a bid to quell the spread. On Friday, risk assets came under heavy pressure, whereas safe-haven assets, such as JPY, have been driven higher. With this dynamic likely to gather pace over the weekend, there is room for further downside in the pair.

Technical Views 

The reversal lower in NZD/JPY this week has seen the market breaking down below the bearish channel and the 79.19 level. Price is currently testing support at the 77.34 level. However, with both MACD and RSI bearish, there is room for the move to continue lower towards 75.63.

NZD/JPY Collapses On Muted Reserve Bank Of New Zealand And New COVID Fears
 

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NZD/JPY Collapses On Muted Reserve Bank Of New Zealand And New COVID Fears

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