NZD/JPY Price Analysis: Trades at fresh five-week-lows around 83.40s

• The NZD/JPY collapses more than 1.50% on Tuesday.
• China’s Covid-19 woes triggered a flight to safe-haven assets, and the JPY rose.
• NZD/JPY Price Forecast: Mixed signals between price action and market sentiment suggest that the NZD/JPY is tilted to the downside.

The New Zealand dollar follows the footsteps of the risk-sensitive currencies battered on Tuesday, amid increasing concerns that China’s coronavirus outbreak and its zero-covid policy create a cocktail that threatens to disrupt the supply chain, spurring elevated prices. Those factors weighed on market sentiment, propelling further yen upside. At the time of writing, the NZD/JPY is trading at 83.36.

Additionally, the Ukraine-Russia hostilities remain and escalated. According to Reuters, Gazprom halted gas deliveries to Bulgaria, while Polish firm PGNIG said Russia would stop gas deliveries starting April 27th.

On Tuesday, the NZD/JPY began the session around 84.73, shy of the daily highs, and dipped towards 84.50 due to negative sentiment in the markets. Nevertheless, the PBoC cutting RRR 100 bps caused a bounce towards the 85.00-14 area, retreating afterward towards the daily low around 83.40, on a negative sentiment shift.

NZD/JPY Price Forecast: Technical outlook

From a technical perspective in the daily chart, the NZD/JPY pair is upward biased. However, the market is being driven by market sentiment, and given that the NZD/JPY broke below March’s 31 low at 84.24, it opened the door for a fall towards October 2021 highs around 82.50.

With that said, the NZD/JPY first support would be the 83.00 figure. A breach of the latter would expose the S1 daily pivot at 82.56, followed by October 2021 highs near 82.50. Once cleared, the next line of defense downwards would be the S2 daily pivot at 82.27.

Key Technical Levels