EUR/NZD has the potential to be a top mover among the majors this week with potential volatility coming for both the euro and the New Zealand dollar.
As we approach the end of the week, we’ll first get the latest monetary policy decision from the European Central Bank (no expected changes to policy) and the latest quarterly CPI data from New Zealand (Analysts see quarterly inflation cooling further to 0.5% in Q4 2020).
Given that the pair is in a longer-term downtrend since October of last year, the odds are in favor of the bears at the moment. And with the pair bouncing off of fresh lows around 1.6800, there may be an opportunity to play the trend at better prices.
So, I’m watching EUR/NZD for a potential swing short position, if we see a dovish ECB event (negative European outlook/surprise increase in stimulus) combined with bearish price action in the euro against the majors.
Couple that with a surprise better-than-expected CPI number from New Zealand, then the odds are pretty good the trend lower may return.
If these scenarios play out, I’ll be on the look out for resistance and bearish patterns to form around current levels / Fibonacci retracement area. The stochastic indicator is also signaling potentially short-term overbought conditions, which help improve the odds of a short position as technical traders may lean bearish at this point.
What do you all think? Are you watching EUR/NZD for a potential trade? If so, what’s your directional bias and entry strategy? Let me know in the comments section below!
Copyright© ftgfx.com 2020 | All right reserved