NZDJPY continues to trend lower and is currently consolidating inside a falling wedge pattern.

Price is testing support around the 78.00 level and might be due for a bounce back to resistance near 79.00. 

The 100 SMA is below the longer-term 200 SMA so the path of least resistance is to the downside. In addition, the 100 SMA lines up with the wedge resistance, adding to its strength as a ceiling when tested. Stochastic is pointing down to show that sellers are in control of price action, but the oscillator is nearing oversold conditions to signal that profit-taking among sellers could spur a bounce. 

Risk-off flows have favored the lower-yielding yen recently and the Kiwi has lost ground on the same market behavior. New Zealand recently reported a 0.3% rebound in dairy prices during the latest GDT auction, though, so there may be some Kiwi bulls left in the game. 

New Zealand is scheduled to print its quarterly manufacturing sales figure next and another strong gain could revive Kiwi gains. On the other hand, a negative figure could spur a downside break. The wedge is approximately 300 pips in height so the resulting breakout could be of the same size.

Meanwhile, Japan is scheduled to print its final GDP and current account balance next. A downgrade is expected for the Q2 growth reading from 1.0% to 0.7% while the current account surplus could widen to 1.65T JPY. 

By Kate Curtis from Trader’s Way