Weakness showdown: NZD vs JPY in the FX markets

[Redator]

Two currencies are at the center of Forex movement in this volatile session: the Kiwi and the Yen — and not in a favorable spot.

The Reserve Bank of New Zealand delivered a 50 bps rate cut, twice as large as many anticipated and only half priced in before the event.

The decision followed a string of disappointing economic data that confirmed deeper cracks in New Zealand’s fragile economy — a trend that had pushed markets toward a dovish repricing earlier this summer.

With the move from the central bank, the NZD took a large hit, particularly from the hesitant pre-meeting pricing (a smaller 25 bps was also 50% priced).

But how much worse can it get? A larger cut today may take out pricing for future cuts.

You can (and should!) explore more on the fundamental dynamics for the Kiwi, whioch also explain major FX dynamics right here:

Read More: AUD/NZD: On the brink of a major bullish breakout above 1.1470 as RBNZ remains dovish

Meanwhile, the Japanese yen finds itself trapped in a different kind of storm — political uncertainty.

Newly elected LDP leader Sanae Takaichi, the first woman to hold the role, is facing difficulties forming a coalition with the Komeito party, leaving Japan’s leadership in partial deadlock.

This uncertainty, paired with growing fiscal concerns, has capped the yen’s prior momentum.

What started as a pre-election strengthening has now flipped into an N-shaped reversal (for nope), with traders sharply selling the currency until clarity returns to Tokyo’s political landscape.

Let's dive into two charts for both currencies: NZDUSD and USDJPY to spot what's next.

Read More:

• Who said that the USD and Gold can't rally together?
• Markets Today: Gold Sails Past $4000/oz, Yen Slides to Fresh Lows & RBNZ Deliver 50 bps Rate Cut. DAX Ready to Rally?

NZDUSD two-timeframe analysis and levels

NZDUSD Daily Chart

NZDUSD Daily Chart, October 8, 2025 – Source: TradingView

The major pair is caught in a downward channel which acted as a sudden support from the selling spikes.

Still largely in a bearish sequence, the pair trades below its 2025 Key support (0.59) and even below its momentum pivot.

However, some value-seeking dip buyers entered to bring back the pair +0.70% from its daily lows as peak dovishness from the RBNZ might be getting priced in.

Let's take a closer look:

NZDUSD 2H Chart and levels

NZDUSD 2H Chart, October 8, 2025 – Source: TradingView

NZD Buyers did change the picture quite sharply after the cut, sending more balanced signs into the price action: If the cut was so dovish, the action would still be at the lows.

Hence, it might be equivocal to look at a more rangebound price action as long as it is contained between the Monthly channel lows and the topline seen on the chart.

Keep an eye on the Pre-Cut level and Daily lows for further momentum insights.

Levels of Interest for NZDUSD trading:

Support Levels:

• March highs Support and Channel lows 0.5730 to 0.5770
• Session lows for Bulls to defend 0.5737
• 0.5650 March Lows Support
• 0.56 Psychological Level

Resistance Levels:

• Pre-cut levels for Sellers to defend 0.57955
• Current High timeframe Pivot 0.5850, topline and MA 200
• 0.59 Main Resistance Zone (+/- 150 pips)

USDJPY two-timeframe analysis and levels

USDJPY Daily Chart and levels

USDJPY Daily Chart, October 8, 2025 – Source: TradingView

The most volatile FX major pair is now up 3.50% from its weekend gap up, followed by the strongest bull candles seen since December 2024 and some hawkish repricing for the FED.

Japanese politicians will have to be careful with their wordings as the charts are sending worrying signs.

Breaking through all-types of resistance levels, the pair is raging higher in an attempt to reprice Yen weakness from the worsening Fiscal outlook.

Keep in mind that Markets are pricing in the worst case for the Yen, therefore any better-looking comment may have a sell-the news effect.

For now, Kazuo Ueda cancelled his speech so the current trade plays on.

The pair will be volatile for while now and traders should expect to see levels breaking up and down depending on upcoming speeches from the Bank of Japan and politicians.

Levels of interest for JPY Trading:

Resistance levels

• Early 2025 interest zone 153.00 to 153.70
• Major Resistance 155.00
• Following Key Resistancee 157.00

Support levels

• 151.00 to 152.00 Key Resistance now Pivot
• 150.00 Psychological Support
• 147.80 to 148.00 Key supporta and MA 50 & 200

Safe Trades!

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