FxWirePro medium term outlook: NZD/JPY short side risk-reward very lucrative

We, at FxWirePro, remains bullish on New Zealand dollar against the U.S. dollar and expect it to rise as much as 1000 pips from here. However, commentaries from the Reserve Bank of New Zealand (RBNZ) have somewhat tainted that bullish outlook, especially in the short run. RBNZ held an emergency inter-meeting meet after the UK referendum and handed out a grim outlook, which has fuelled the speculations that RBNZ will further reduce rates in response to Brexit vote.

On the other hand, Yen has a lot to gain if Bank of Japan (BoJ) disappoints in the stimulus front. We expect the yen to strengthen in the medium term despite stimulus from Japan and it may reach as low as 90 per dollar, which would be 1600 pips from the current rate.

Hence we expect, in a risk-on environment in the medium term, NZD would decline, whereas JPY would strengthen.

Trade idea:

Sell NZD/JPY at the current rate of 74.2, with a stop loss around 77 area and targets around 67 area.