There are reasons for further NZDJPY gains over the medium term.
The New Zealand dollar
The RBNZ is on course to raise interest rates up to a projected terminal rate of 3.3%. This means the RBNZ is now on a hiking cycle to control inflation and subdue a hot housing market which should result in medium-term NZD strength.
The Japanese Yen
By contrast, the BoJ is keeping its 10-year bonds in the +0.25% to -0.25% band, has low inflation and is expected to keep its low interest rates unchanged for the foreseeable future. It is argued by some that the JPY ‘carry trade’ is back. The surge higher in oil prices has certainly helped keep the JPY weak.
Over the last 22 years, the NZDJPY has risen 16 times between March 16 and April 12. The percentage of winning trades has been 63.64% and the average gain has been 2.11%. So, the seasonal bias for the NZDJPY pair should favour gains.
Major Trade Risks: Risk-off markets would typically result in NZDJPY weakness, but that pattern has been broken a little recently due to the unique market dynamics. However, this risk does remain should market conditions alter.