EUR/NZD – Headed Back to 1.52

EUR/NZD – Headed Back to 1.52

EUR/NZD – Headed Back to 1.52

Euro ended the day unchanged against the greenback. Since breaking below the 200-day SMA last week the currency pair remains under pressure and vulnerable for another test and possible break of 1.10. The ECB continues to buy bonds with their purchases picking up steam over the past week. The reports of Italy’s banking troubles continue to grow and while it may not be the biggest story in the financial market right now, it could become the headline in the coming months. There’s not much in the way of Eurozone data this week and no major speeches from policymakers is scheduled so the euro should remain under pressure. While the New Zealand dollar also sold off, there was no catalyst for the pullback outside of profit taking. Data from New Zealand was actually strong with credit card spending rising 1.2% in the month of June. The country offers a generous 2% yield in a negative interest rate environment, the housing market is booming faster than the central bank would like and last week, the RBNZ warned that further rate cuts could lead to financial instability. For all of these reasons and more, we like selling EUR/NZD.

Technically today’s rally in EUR/NZD is a strong one but as long as the pair remains below the 1st standard deviation Bollinger Band at 1.5415, the downtrend remains intact. Considering that the low today was 1.5092, a reversal of today’s move could easily take EURNZD back below 1.5200.

Chart Of The Day

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