NZD/JPY holding steady above the 76.00 level ahead of government budget

The NZD/JPY is trading up slightly in the early Asia session, testing above the 76.00 handle as the Yen walks back amid a broader market recovery that sees market sentiment getting a chance to recover.

Today brings the new Zealand government's latest budget release at 02:00 GMT, and traders will be expecting a positive outlook for the NZ economy. Kiwi bulls are desperate for some goods news, after a steady flow of disappointing data for New Zealand has pilloried the NZD lately, and expectations of a rate hike from the Reserve Bank of New Zealand (RBNZ) have slumped, and the central bank is likely to stand pat on interest rates well into 2020, with even odds that the RBNZ may have to reduce rates at some point before they can begin tightening their monetary policy.

It's a quiet day on the Yen side with little on the calendar, though late Wednesday saw Japanese Machinery Orders for April slump, with the year-on-year figure contracting by -2.4%, an unexpected deviation from the forecast 0.3% figure and a steep turnaround from the previous 2.4% increase.

NZD/JPY levels to watch

The pair is still trapped in a steep downside channel, and the pair has declined steadily from April's high of 79.60. April's high represented a failed test of the 200-day SMA, which currently sits at 78.70. the 50-day EMA is providing from 77.20, while a continuation of the bearish trend will have to first break through the major double-bottom from the 75.50 region.