Technical Analysis

The classic carry trade continues to run as reflation bets continue

NZD/JPY once paid 7%

The days of carry are long gone but perhaps the run in NZD/JPY for the past two weeks reveals that they will soon return.

The days of 7% carry in NZD/JPY are long gone but the persistent bid in the pair along with a broader reflationary narrative could continue to underpin the pair. I keep looking for a pullback that never comes. The pair have been on the opposite ends of the FX spectrum every day this week and for most of last week in a classic breakout.

The weekly chart shows the long period of consolidation as hiccups around delta hit but the break has been impressive. It will face a big test at 84.90 but the strength of the move so far is grounds for optimism.

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