• NZD/JPY witnessed a dramatic turnaround from a nearly two-week high touched this Wednesday.
• The RBNZ’s surprise rate cut prompts aggressive selling, though a positive risk tone helps limit losses.
• The technical setup favors bearish traders and supports prospects for a further near-term downfall.

The NZD/JPY cross retreated around 150 pips from the 89.50 area, or a nearly two-week high touched earlier this Wednesday in reaction to the Reserve Bank of New Zealand's (RBNZ) surprise 25 basis points (bps) rate cut. Spot prices, however, manage to rebound a few pips from the daily low and trade around mid-0.8800s during the first half of the European session, still down 0.80% for the day. 

A generally positive tone around the equity markets, along with diminishing odds of the Bank of Japan (BoJ) hiking interest rates again this year, undermines the safe-haven Japanese Yen (JPY) and offers some support to the NZD/JPY cross. That said, any meaningful recovery still seems elusive in the wake of the RBNZ's dovish tilt, indicating more cuts over the coming months in the wake of the recent progress towards meeting the annual inflation target and weaker domestic economic growth.