NZDJPY recently fell through the bottom of its ascending channel on the 4-hour time frame and is pulling up for a retest. Price could resume the slide to the downside targets marked by the Fibonacci extension tool next.

The 38.2% level is close by at 86.67, then the 50% level is at 86.10. Stronger selling pressure could take it down to the 61.8% extension at 85.54 or the 76.4% level that lines up with the swing low. The full extension is at 83.70.

The 100 SMA just crossed below the 200 SMA to indicate that the path of least resistance is to the downside or that the uptrend reversal is more likely to gain traction from here. Price is also trading below both moving averages, so these could keep holding as dynamic resistance.

A move back above the moving averages and the swing high at 88.52 could suggest that the uptrend might still resume.

Stochastic is on the move down to confirm that bearish pressure is present, but the oscillator is nearing the oversold region to signal exhaustion. RSI has more room to head south before reflecting oversold conditions, so NZDJPY could follow suit.

A shift in the RBNZ policy bias to a more neutral stance has put downside pressure on the Kiwi while the BOJ decision to tweak its yield curve control policy has boosted the yen.

Risk-off flows stemming from expectations of higher global borrowing costs, possibly stemming from an upbeat US jobs report, could mean more downside for NZDJPY later on this week. After all, the prospect of higher US interest rates could increase the risks of a recession, which would be bearish for riskier currencies.

Also note that Fitch just downgraded US credit on account of rising national debt and repeated standoffs, triggering a flight to safety that usually benefits lower-yielding currencies like the yen.