Today's rate cut of New Zealand's regulator weakened the country's currency, so the yen dominates in the pair now.
NZD has been struggling to regain momentum over JPY since the price bounced off the 76.50 area with a daily close. New Zealand's labor figures showed minor wage growth last week. Also, employment is falling, while business sentiment has also remained gloomy, all these added arguments for a rate cut. Today New Zealand's central bank cut its interest rate from 1.75% to 1.50% after keeping it unchanged for 2.5 years. According to the RBNZ, the rate cut was done in order to support the cooling economy and counter global uncertainties. The rate cut immediately pushed the kiwi lower indicating further weakness of the currency. The RBNZ's committee stated that global economic growth slowed down since 2018 and it eased the demand for New Zealand's goods and services. The RBNZ forecasts the rates to be steady at 1.50% and inflation to rise at a slower pace in the upcoming months.
On the yen side, today Japan's Monetary Base report showed a decrease to 3.1% from the previous value of 3.8%, while the reading was expected to be at 3.6%. Additionally, the minutes of the Monetary Policy meeting were also released, the BOJ kept its monetary policy steady despite cutting its assessments on exports and output amid heightening global economic risks. A few Bank of Japan's board members said the regulator must pay attention to the impact that its prolonged ultra-loose monetary policy had on regional banks' profits.
As for the current scenario, NZD is expected to soften against JPY. However, the market sentiment might shift towards NZD for a certain period as the BOJ is still quiet about the issues that need to be solved.
Now, let us look at the technical view. The pair is currently trading at the key support area of 72.50. It is anticipated to move higher towards the dynamic level of 20 EMA before dropping lower again. The price has recently formed Bullish Divergence which indicates the upcoming bullish sentiment. As far as the price remains below the 76.50 area, the bearish bias is expected to continue.
