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Chart of the Day: NZDJPY

The NZDJPY is holding steady ahead of a busy trading week. Yesterday, third-quarter retail sales came in at 1.6% beating market expectations of just 0.5% and the NZD trade balance came in slightly below expectations, but still an improvement on the prior period.

The risk-on mood is working in the NZD favour as global US equity markets are pushing for record highs, while the safe-haven JPY traded lower against the majority of G10 currencies. As NZDJPY has a large interest rate differential, it’s considered a very popular carry trade.

NZDJPY daily chart

The pair is consolidating in a narrow sideways range with limited gains for the past month. We are seeing a negative divergence as the price makes a new high, but the 14-day RSI is making a lower high.

Can we expect a technical breakout from the sideways consolidation zone?

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