NZDJPY recently fell through support around the 78.00 major psychological mark and appears to be completing a retest of this area of interest.

Holding as resistance could send the pair down to the downside targets marked by the Fibonacci extension tool. The 38.2% level is near the 77.00 major psychological mark then the 50% level is at 76.60. Stronger bearish pressure could take it down to the 61.8% Fib at 76.14 or the 76.4% level at 75.57. The full extension is at 74.65.

The 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside or that the ceiling is more likely to hold than to break. These moving averages also appear to be holding as dynamic resistance on this pullback.

Stochastic is already dipping into the oversold region to signal exhaustion, so turning higher would mean that buyers are returning. RSI has a bit more room to slide before reaching the oversold area, so sellers could stay in control for a bit longer.

NZDJPY could take cues from overall market sentiment when it comes to its direction for the week, as there are no major reports due from New Zealand and Japan.

It’s worth noting, however, that Japan just printed a drop in retail sales and an increase in its jobless rate. Meanwhile, RBNZ head Orr noted that the New Zealand economy is starting to return to pre-pandemic levels, which could prompt expectations of a rate hike or at least a reduction of its asset purchases.

The NFP release might also indirectly impact NZDJPY direction, as the prospect of tapering from the US could revive risk-off flows. A weak read, on the other hand, could imply that the Fed would keep rates low for much longer, which would be bullish for higher-yielding assets and currencies like the Kiwi.