EURNZD is in the middle of pulling back up to the descending channel resistance visible on its 4-hour time frame. Using the Fib tool on the latest swing high and low shows that the 61.8% retracement level lines up with a former support area around the 1.5400 major psychological level and the top of the channel.
The 100 SMA is below the 200 SMA so the path of least resistance is to the downside and the selloff is likely to carry on. However, stochastic is on the move up so buyers might still be in control of price action for now. Still, the oscillator is nearing the overbought zone, which might indicate a pause in bullish momentum.
If the top of the channel holds as resistance, price could resume its drop to the swing low at the 1.5100 major psychological mark or all the way down to the channel support closer to 1.4900. A break past the channel resistance and the swing high at 1.5600 could indicate a reversal.
There are no major reports lined up from New Zealand for this week so the Kiwi could move to the tune of risk sentiment. Data from Australia and China are lined up towards the end of the week and the outcome of these releases could also influence Kiwi price action.
There are also no major reports due from the euro zone, as the shared currency appears to be taking its cue from UK events. Political clarity is returning to the UK now that David Cameron will be stepping down from his Prime Minister post to give way to Theresa May.
However, the upcoming BOE statement could contain plenty of dovish remarks and actual easing action from the UK central bank. If so, the euro could also resume its drop on a projected slowdown in the region.
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