NZDJPY could be in for a reversal from its slide, as the forex pair formed a double bottom pattern on its hourly time frame. Price is inching closer to testing the neckline around the 85.50 minor psychological mark.

A break above this resistance area could set off a climb that’s the same height as the formation, which spans around 200 pips. The 100 SMA is above the 200 SMA to suggest that the path of least resistance is to the upside, and the pair is climbing above these dynamic inflection points.

However, stochastic is already indicating overbought conditions or exhaustion among buyers, so turning lower would confirm a return in selling pressure. RSI is also heading down without reaching the overbought area, suggesting that sellers are eager to take over. Both oscillators have plenty of room to slide before reaching the oversold region.

If resistance holds, NZDJPY could resume the drop to the lows around the .8350 minor psychological mark or lower.

NZDJPY has been bogged down by risk-off flows as global trade uncertainties are weighing on higher-yielding commodity currencies. At the same time, the Japanese yen is raking in safe-haven gains while also taking advantage of the hawkish BOJ stance.

Recall that the BOJ already hiked interest rates earlier this year and signaled plans to keep tightening monetary policy while data comes in line with their expectations. The April spring wage negotiations could further contribute to upside inflationary pressure, prompting the central bank to increase borrowing costs in their upcoming meeting.

Meanwhile, the RBNZ cut rates by 0.50% in their February decision and indicated plans to keep easing policy, albeit at a more gradual pace than before. Still, weakening trade prospects and the possibility of supply shocks could keep the central bank cautious, as commodities could take huge hits on any disruptions.