NZD/JPY looking to extend gains, building support from 78.00

• The NZD/JPY is punching in gains against the Yen, but resistance remains as markets fear trade wars.
• The Yen's safe haven status is limiting the NZD's ability to break into a full-on bull trend.

The NZD/JPY is trading on the high side heading into the Tokyo market, trading just above the 78.00 handle.

The Kiwi initially lost ground against the Yen in Wednesday's action as traders piled into the safe-haven JPY following a round of tariffs from the US which was quickly followed-up by a response from China, and markets are still nervous about a potential showdown between the two countries in an all-out trade war. The US and China now have a combined $100 billion (in USD terms) of tariffs aimed at each other, not including the steel and aluminum tariffs from Trump's administration recently as well as China's initial tariff response, which came into effect this Monday.

The NZD/JPY is holding in an elevated position as traders are getting better at shaking off the geopolitical tensions that flow out of the US White House on an almost daily basis.

The Kiwi has been bolstered this week by a good uptake on global dairy prices, as well as an unexpected budget surplus for the New Zealand government.

NZD/JPY Levels to watch

If risk aversion comes back into fashion during Thursday's trading, the challenge for short sellers will be to drive the pair passed yesterday's low of 77.12, where they can set up a run at the week's low point of 76.15, while a continuation of the Kiwi's healthy bidding will be running into resistance from mid-March's swing high at 78.60, with further resistance from the 200-day SMA, near 79.50.