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In the absence of major economic releases in the upcoming trading session, risk-off flows from earlier on could stick around.

Asian shares closed mostly lower as market watchers focused on China’s ban on Australian meat imports.

Before we look into catching the bearish momentum on NZD/JPY, here’s a quick look at how the majors are faring and the top headlines in the previous session:

Currency Snapshot

Major Forex Pairs Price Performance from MarketMilk
Major Forex Pairs Price Performance from MarketMilk

Fresh Market Headlines & Economic Data:

Upcoming Potential Catalysts on the Economic Calendar:

  • U.S. NFIB Small Business index at 11:00 am GMT
  • U.S. CPI readings due 1:30 pm GMT

What to Watch: NZD/JPY

NZD/JPY 1-hour Forex Chart
NZD/JPY 1-hour Forex Chart

Market players seemed to be in no mood for risk-taking in the Asian session as China threw a jab on Australia’s meat industry.

Some say that this might be a form of retaliation on the Land Down Under’s call for an independent inquiry into the origins of the COVID-19 outbreak.

Although Beijing has denied any bad blood between the two nations, many can’t help but worry that this could be another trade war brewing. It doesn’t help that risk appetite has already been shaky on account of fears that the pandemic has a second wave coming.

But until the market mood changes, higher-yielding currencies like the Kiwi could keep taking hits.

Meanwhile, the Japanese yen could be a better safe-haven option versus the dollar since traders might be bracing themselves for the CPI figures due later in the day. Besides, the latest remarks from the BOJ suggest that the central bank pretty much has its act together.

NZD/JPY just bounced off the top of its range at the 65.80 level and there’s still plenty of room for the pair to move lower before finding a floor.

Support might be found at the bottom of the range around 63.85 or the area of interest around the middle at 64.80. Just make sure you take the average NZD/JPY volatility into account when setting exit levels!