Bias: The bias is bullish-to-range-bound, as the NZD is currently above its 90-day average and in the upper half of the recent 3-month range.
Key drivers:
- Rate gap: The Reserve Bank of New Zealand has shifted to a policy of easing, while the Bank of Japan has initiated monetary tightening, benefiting the NZD against the JPY.
- Risk/commodities: Current oil prices are above average, which tends to create a favorable outlook for risk-sensitive currencies like the NZD, potentially supporting its value.
- Global trade tensions: New Zealand's exports face uncertainty due to recent U.S. tariffs, which could weaken the NZD if trade conditions worsen.
Range: The NZD/JPY is likely to drift within the recent 3-month range, showing resilience due to supportive factors but susceptible to market caution.
What could change it:
- Upside risk: A resurgence in global risk appetite could drive the NZD higher against the JPY.
- Downside risk: Continued risk-off sentiment stemming from trade concerns could push the NZD lower.