Monday and Tuesday saw the EUR/NZD trade lower, after which traded pretty much sideways as commodity currencies took a hit, as crude oil fell to the lowest levels since the 2009 financial crisis. Current within a range between 1.6240 and 1.6020, we need to see a break below the low's last week for further downside moves. The speed of the current decline seems to be respecting the 21 on the 4hr chart, and we will use this as a guideline for our stop levels, which is currently placed near 1.6235.
With a pretty quiet week for major economicc data coming up, the pair is likely to consolidate within the range, which is why we plan not to move our stops relative to the 21 for this week. We will need to watch what happens at the 1.6020 lows of last week as a failure to break below, will form a formation, leading to a recovery for EUR/NZD, back towards 1.6400.
Fundamentally, NZD seems to be but the medium term outlook should allow the NZD to improve slightly, from previous comments about interest rate cuts being put on hold, and GDP results in line with expectations. We are however, worried about EUR strengthening, as the cycle of the EUR decline seems to be coming to an end.
We would like to see EUR/USD break below 1.0800 for further declines, which is highly likely, given that the Fed has tightened, and renewed dollars should push the EUR lower, as it is still structurally weak.
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