EURNZD has been trending lower on its 1-hour time frame, forming a descending trend line connecting the recent highs. Price just broke below a near-term support area at 1.6700 and might be due for a pullback soon.
Using the Fibonacci retracement tool on the latest swing high and low shows that the 61.8% level lines up with the descending trend line and the moving averages. The 100 SMA is below the 200 SMA, confirming that the selloff is likely to carry on.
Stochastic is on the move up but is nearing the overbought levels, which suggests that buying pressure could fade soon and sellers might take over. RSI is still on the move up, suggesting that the correction could stay in play for a while before the drop resumes.
The German Ifo business climate index is up for release today and a drop from 107.3 to 107.0 is eyed, although a weaker than expected reading might be enough to push EURNZD lower with just a shallow retracement. Right now, price hasn’t even reached the 38.2% Fib yet.
Meanwhile, the pickup in commodity prices might be enough to sustain the Kiwi’s gains in the absence of top-tier data from New Zealand. Recent medium-tier reports have been positive, with credit card spending picking up by 8.9% as of the latest reporting period.
Concerns about a potential Brexit are currently weighing on European markets, as money is flowing out of the region into Asia. This could be another factor keeping the downtrend on EURNZD intact for now, as traders wait for more top-tier reports lined up next week.
Australia’s quarterly private capital expenditure report might also have an impact on this pair’s movement because of New Zealand’s close ties to the Land Down Under.
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