NZD Rises; JPY Drops Amid Risk-on Mood

(RTTNews) - The New Zealand dollar strengthened, and the safe-haven yen weakened against major currencies in the Asian session on Tuesday amid risk appetite, as traders continued to pick up stocks at reduced levels following recent weakness. They also seemed reluctant to make more significant moves ahead of the U.S. Fed's monetary policy announcement on Wednesday.

Traders may also follow the latest geopolitical developments and assess their impact on financial markets. Investor confidence was raised by optimism for US-Russia peace talks, which contributed to the NZD's rise as well as JPY's drop.

The optimism around China's stimulus initiatives continues to provide strong support for the global risk mood.

Markets have been pricing in the possibility of the Bank of Japan (BoJ) raising interest rates this year.

While the Fed is almost universally expected to leave interest rates unchanged, traders will look to the accompanying statement and officials' latest projections for clues about the outlook for rates. The Bank of England, the Bank of Japan and the Swiss National Bank are all scheduled to announce their monetary policies later in the week.

The Fed is widely expected to leave interest rates unchanged, with traders likely to scrutinize the accompanying statement as well as officials' latest projections for clues about the outlook for rates amid much uncertainty about the economic impact of President Trump's trade policies.

Elsewhere, the Bank of Japan is set to hold the benchmark rate at the current level of 0.5 percent on Wednesday.

The Bank of England is expected to take another pause on its rate-cutting path Thursday while Switzerland's central bank looks set to cut interest rates for the last time in the current cycle.

The Kremlin confirmed that Russian President Vladimir Putin would talk to the U.S. President Donald Trump by phone on Tuesday.

Elsewhere, Israel carried out airstrikes in the Gaza Strip, southern Lebanon and southern Syria on Monday, killing at least 10 people.

In the Asian trading today, the NZ dollar rose to more than a 1-month high of 87.20 against the yen and a 2-week low of 1.8723 against the euro, from yesterday's closing quotes of 86.99 and 1.8751, respectively. If the kiwi extends its uptrend, it is likely to find resistance around 88.00 against the yen and 1.82 against the euro.

Against the U.S. and the Australian dollars, the kiwi advanced to more than 3-month highs of 0.5831 and 1.0951 from Monday's closing quotes of 0.5823 and 1.0959, respectively. The kiwi may test resistance around 0.60 against the greenback and 1.08 against the aussie.

Meanwhile, the Japanese yen weakened against other major currencies in the Asian session amid risk appetite.

The yen fell to near 2-month lows of 163.59 against the euro and 194.44 against the pound, from yesterday's closing quotes of 163.12 and 193.88, respectively. The next possible downside target for the yen is seen around 165.00 against the euro and 195.00 against the pound.

The yen slipped to nearly a 1-1/2-month low of 170.05 against the Swiss franc, from Monday's closing value of 169.53. On the downside, 172.00 is seen as the next support level for the yen.

Against the U.S., the Australia and the Canadian dollars, the yen dropped to nearly a 2-week low of 149.88, nearly a 4-week low of 95.56 and more than a 2-week low of 104.82 from early highs of 149.40, 95.33 and 104.49, respectively. If the yen extends its downtrend, it is likely to find support around 155.00 against the greenback, 99.00 against the aussie and 108.00 against the loonie.

Looking ahead, Germany's ZEW economic sentiment survey results for March and Eurozone foreign trade data for January are due to be released in the European session.

In the New York session, Canada CPI for February, U.S. building permits, housing starts, export and import price, industrial and manufacturing production indices, all for February and U.S. Redbook report are slated for release.