Forex: NZD/JPY approaches key 80.00 figure

NZD/JPY, without making much noise, continues to grind higher, breaking through 79.60 - former top - to now establish a new peak at the 79.79 as carry-trade 'aficionados' pile into the trade. The pair has been on a steady rise since finding a bottom ahead of 75.00 on Feb 27, up more than 6.5% since then.

On the upside, the psychological 80.00 big round number should see supply increase. If the Kiwi establishes new territory above the number, the sky seems blue until next area of resistance at 81.50, sequence of highs from July 2008. On the downside, 79.50 provide support on shallow pullbacks, ahead of 79.00 - Feb 25 swing high - on deeper corrections and 78.20/40 key demand area.

Adam Button, editor at Forexlive, notes: "In times of relative stability, traders borrow the low yielding yen and buy the high yielding Kiwi. It’s been going on for years and the environment in early 2013 as mostly been a carry trader’s dream."

"But with a carry trade, there are always scary dark clouds on the horizon. The nine days of gains simply erase the two day plunge following the Italian election. It takes nerves of steel to stay in the carry trade, but it always seems to pay off" he adds.