NZDJPY has formed lower highs and found support at the 83.50 minor psychological mark, creating a descending triangle pattern on its hourly time frame. Price might be in for a break of support soon.

The pair is currently testing the triangle bottom, and a break lower could set off a drop that’s the same height as the triangle or around 200 pips. The 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside or that support is more likely to break than to hold.

At the same time, stochastic is turning lower from the overbought zone to signal a return in selling pressure. The oscillator has plenty of room to head south before reflecting oversold conditions. RSI is also heading down, so price could follow suit as bearish pressure picks up.

There are no major reports due from New Zealand today, but it looks like risk-off flows have strongly been in play over the past trading session. This could encourage traders to buy up safe-haven assets like the lower-yielding yen.

Asian markets have been on the decline as China is reportedly doubling up on its zero-COVID policies. Investors worry that this could have negative repercussions on the global economy, particularly on business activity and supply chains.

Keep in mind, however, that the BOJ has been keen on keeping the yen weak in order to benefit the Japanese economy. The central bank has already intervened in the forex market to make sure this happens, so another sharp rally for the currency might be met with more jawboning.

Earlier in the week, New Zealand reported jobs data in line with expectations, with quarterly employment change up 0.1% and the jobless rate holding steady at 3.2%.