NZD/JPY Price Analysis: Clings to the 78.60s area after tanking 100-pips

• The New Zealand dollar vs. the JPY advances 0.06% as the Asian Pacific session begins.
• Dismal market sentiment would keep the JPY buoyant to the detriment of the NZD.
• NZD/JPY remains upward biased, though it might print a leg-down towards the 78.20s region before resuming upwards.

NZD/JPY edges up barely as the Asian session begins. However, on Monday, the cross-currency pair retreated from a year-to-date high around 79.58 to 78.55 daily low, as investors dumped assets with anything with the “risk” word attached to it, in the case of the NZD/JPY pair, the risk-sensitive NZD. At press time, the NZD/JPY is trading at 78.67.

On Monday, Global equity indexes plunged in tandem with some commodity currencies as of late in the North American session. Russia-Ukraine tussles alongside the US banning oil from Russia increased tensions with Moscow. At the same time, the third round of talks proved to be ineffective in spurring a ceasefire between both parties.

In the meantime, the FX space reflected the market’s mood late in the North American session, with the USD and the JPY being the stronger currencies at the end of New York’s trading day.

NZD/JPY Price Forecast: Technical outlook

The NZD/JPY retreated from the confluence of May 10, 2021, daily high and the top-trendline of an ascending channel around the 79.20-42 area. Nevertheless, NZD/JPY bulls achieved a daily close above the last three-day lows, and if the NZD/JPY dips lower in the near term, it will find support at the confluence of the 100-day moving average (DMA) and the mid-line of the ascending channel at around 78.23.

If that scenario plays out, NZD/JPY’s first resistance would be January 13 daily high at 78.83. Breach of the latter would expose January 5, daily high at 79.24, followed by March 7 daily high at 79.58.