If you want to trade EUR without having to risk any exposure to the US dollar ahead of today’s key events, you can look at this downtrend setup on EUR/NZD. The pair has made a strong impulse wave down from the 1.5600 levels until the vicinity of the 1.5400 mark, but the pair is showing signs of retracing.
EUR/NZD could pull up to the Fibonacci retracement levels marked on the 4-hour forex chart. On top of that, a falling trend line can be drawn to connect the pairs highs, indicating that price might also retreat to that resistance area later on.
The 50% Fibonacci level is closer to the trend line resistance though and enough buying momentum could trigger a larger market correction. If you’re looking to trade EUR with a short setup, you could set your orders on the trend line or 50% Fibonacci retracement level with a stop above the 61.8% Fibonacci retracement level.
Trade EUR and NZD
ECB Governor Draghi has recently emphasized the central bank’s plan to keep interest rates low for the foreseeable future and their goal of starting more targeted long-term refinancing operations later this year. This week, the euro zone industrial production release reflected a weaker than expected reading while the previous month’s reading was downgraded.
Meanwhile, the Kiwi has the New Zealand quarterly CPI figure line up for release this week. Recall that commodity prices have fallen recently so there could be a downside surprise for this report.
Despite that, the euro is still on a fundamentally weaker spot compared to the Kiwi, as the ECB is more inclined to ease while the RBNZ is planning on another interest rate hike. To trade EUR with a bearish bias against a long NZD position might have a higher probability of working out.
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