NZD/JPY Price Analysis: Bounced off the weekly lows reclaiming the 200-DMA around 78.20

• The NZD/JPY climbs from weekly lows around 77.80s as market mood improves.
• NZD/JPY Technical Outlook: The pair is upward biased, but downside risks remain as the 200-DMA is near to the current spot price.

The NZD/JPY jumps from weekly lows on Tuesday as the New York session finishes. At the time of writing, the cross-currency is trading at 78.25. The market mood remains upbeat, as portrayed by US equities finishing in the green. Meanwhile, Asian stock futures point to a higher open, led by the Nikkei 225 and the Australian ASX/S&P, up some 0.81% and 0.86%, respectively.

NZD/JPY Price Forecast: Technical outlook

On Tuesday, the NZD/JPY pair dipped to 77.84 but gained traction immediately as the market mood improved. The NZD/JPY is mainly used as a pure market sentiment play. Any risk-off mood propels investors towards the security of the low-yielder Japanese yen, thus depreciating the NZD and risk-sensitive currencies.

So the pair bounced off weekly lows, reaching a daily high at 78.34, though it failed to gain traction, towards an attempt of the 1-hour 200-simple moving average (SMA), retreating to current price levels.

The NZD/JPY daily chart depicts an upward bias, as Tuesday’s price action broke above the 200-day moving average (DMA). However, the presence of the 50 and the 100-DMA above the spot price could exert downward pressure on the pair. To the upside, the first resistance would be the 50-DMA at 78.43. A decisive break of that level would expose the 100-DMA at 78.65, followed by a three-month-old downslope trendline around the 78.75-90 area.

Conversely, the first line of defense for NZD bulls would be the 200-DMA at 78.15. A crucial break would open the door for further downward pressure. The following support would be 78.00, followed by the January 10 pivot low at 77.58, and December 20, 2021, daily low at 76.02.