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NZD/USD fell at the end of the weekresting around 0.5590 after struggling to sustain previous gains.RSI plunges to 40 in negative territory, pointing to weakening momentum as sellers regain confidence.MACD histogram shows rising green bars, hinting that not all bullish interest has faded despite the drop.The NZD/USD pair lost ground on Friday, sliding 0.30% to settle near 0.5590. This downturn casts doubt on the sustainability of the pair’s recent consolidation above its 20-day Simple Moving Average (SMA), a region that might still offer a line of defense for buyers hoping to maintain upward traction. With sellers beginning to chip away at gains seen earlier in the week, it remains uncertain whether the pair can cling to its fragile support zone. From a technical perspective, momentum readings are mixed. The Relative Strength Index (RSI) has retreated sharply to 40, underscoring a renewed bout of bearish pressure. Meanwhile, the Moving Average Convergence Divergence (MACD) histogram continues to produce green bars, suggesting that some underlying bullish sentiment persists but in a less confident manner. These conflicting signals underscore the delicate nature of the current price action. Should NZD/USD consolidate effectively near the 20-day SMA, now around the 0.5600 mark, buyers may attempt another push higher, with 0.5630 serving as an interim hurdle before a potential run at 0.5650. Conversely, a decisive breach below 0.5580 would likely hand control back to the bears, exposing lower targets near the 0.5550 region and undermining the pair’s nascent support base. NZD/USD daily chart

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The US Dollar broadly gained ground on Friday as the Greenback gets bolstered by declining US Treasury yields in the face of renewed bets of Federal Reserve (Fed) rate cuts in 2025. Key segments of US inflation figures eased slightly throughout the week, reinvigorating hopes that price growth pressure will ease enough to push the Fed toward delivering rate cuts earlier in the first half of the year than previously expected. The Bank of Japan’s (BoJ) next rate call is due early next Friday, where the normally-hyperdovish Japanese central bank is expected to raise interest rates by another 25 bps. US Purchasing Managers Index (PMI) activity survey results are also expected next Friday, but the runup to the key events are a notably sedate data docket on the cards, leaving investors to focus on jawboning from policymakers. USD/JPY price forecastUSD/JPY gave a tidy technical bounce from the 50-day EMA on Friday, bouncing from 155.00 and setting up Greenback bulls for a fresh run up the charts after snapping a two-day backslide. The immediate ceiling is still priced in near the 159.00 handle. Even if the pair rotates into a fresh bullish stance, there is still plenty of room to run before the Dollar-Yen pair runs into record highs set in 2024 near 162.00. There is a hard limit on how high Dollar bulls can run the pair before the BoJ begins getting nervous again and hovering one hand over the intervention button. USD/JPY daily chartJapanese Yen FAQs What key factors drive the Japanese Yen? The Japanese Yen (JPY) is one of the world’s most traded currencies. Its value is broadly determined by the performance of the Japanese economy, but more specifically by the Bank of Japan’s policy, the differential between Japanese and US bond yields, or risk sentiment among traders, among other factors. How do the decisions of the Bank of Japan impact the Japanese Yen? One of the Bank of Japan’s mandates is currency control, so its moves are key for the Yen. The BoJ has directly intervened in currency markets sometimes, generally to lower the value of the Yen, although it refrains from doing it often due to political concerns of its main trading partners. The BoJ ultra-loose monetary policy between 2013 and 2024 caused the Yen to depreciate against its main currency peers due to an increasing policy divergence between the Bank of Japan and other main central banks. More recently, the gradually unwinding of this ultra-loose policy has given some support to the Yen. How does the differential between Japanese and US bond yields impact the Japanese Yen? Over the last decade, the BoJ’s stance of sticking to ultra-loose monetary policy has led to a widening policy divergence with other central banks, particularly with the US Federal Reserve. This supported a widening of the differential between the 10-year US and Japanese bonds, which favored the US Dollar against the Japanese Yen. The BoJ decision in 2024 to gradually abandon the ultra-loose policy, coupled with interest-rate cuts in other major central banks, is narrowing this differential. How does broader risk sentiment impact the Japanese Yen? The Japanese Yen is often seen as a safe-haven investment. This means that in times of market stress, investors are more likely to put their money in the Japanese currency due to its supposed reliability and stability. Turbulent times are likely to strengthen the Yen’s value against other currencies seen as more risky to invest in.