NZDJPY has been trading inside a range with support at the 83.50 minor psychological mark and resistance at the 86.50 level. Price has since fallen below support and could be in for a drop that’s the same height as the rectangle pattern or 300 pips.

The moving averages are still oscillating to reflect rangebound conditions, barely offering strong directional clues at the moment. Meanwhile stochastic is already dipping into the oversold territory to reflect exhaustion among sellers and a potential return in bullish pressure.

If that’s the case, NZDJPY could pull back up to the broken range support which could hold as resistance. RSI is also in the oversold region to signal that sellers could use a break and let buyers take over next.

NZDJPY could take cues from the quarterly jobs release of New Zealand, which is slated to show a faster gain of 0.4% in hiring versus the earlier 0.1% uptick. This might be enough to bring the unemployment rate down from 3.2% to 3.1% for Q2 2022.

A stronger than expected read would confirm that the New Zealand economy has done a fine job of battling inflation while still avoiding a recession, unlike most of the other major economies. On the other hand, a weak figure or a surprise decline could bring more downside for the Kiwi.

There are no major reports due from the Japanese economy, so the yen could move purely based on risk sentiment. A return in risk-off flows could mean more upside for the safe-haven currency while a pickup in demand for higher-yielding assets could spark losses.

Note that the upcoming US NFP release tends to have an impact on overall market sentiment, which might indirectly affect this yen pair. A strong figure could seal the deal for another big increase in US borrowing costs, which might bring risk aversion back in the markets.