EURNZD Forex Forecast – Potential Correction Setup

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EURNZD Forex Forecast - Potential Correction Setup

EURNZD Forex Forecast - Potential Correction Setup

EURNZD recently surged past a resistance level visible on the 4-hour chart after the Greek parliament approved the third bailout plan. Price zoomed past the 1.6700-1.6800 levels then peaked around the 1.7100 mark before retreating.

Using the Fib tool on the latest swing high and low shows that the 61.8% Fibonacci retracement level lines up with the broken resistance, which might now hold as support. Stochastic is moving down and is near the oversold zone, signaling that there’s a bit of selling pressure left for a deeper pullback before the uptrend resumes. RSI is also moving down, indicating that sellers are in control for now.

A bounce off the 61.8% Fib could lead to a rally back to the 1.7100 handle or beyond. The 100 SMA is still above the 200 SMA, confirming that the recent climb is set to carry on.

EURNZD Fundamental Factors

Event risks for the Kiwi this week include New Zealand’s global dairy trade auction and the PPI quarterly release mid-week. Another fall in dairy prices and input prices could mean more losses for the Kiwi, as this might spur more RBNZ easing action sooner or later.

As for the euro, the ECB Greek payment deadline on August 20 could prove to be an event risk, although the nation is expected to use the bailout funds to pay this obligation. The lack of any delays could be positive for the euro, allowing EURNZD to have a smaller than expected pullback to the 38.2% level before resuming its uptrend.

On the other hand, more trouble in Greece and the hesitation of the IMF to be on board with the bailout could mean more declines for the euro and possibly a break below the 61.8% Fib for EURNZD. Commodity price action could also have a say in this pair’s movement, as further falls in gold and oil could be negative for the Kiwi.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.