EUR/NZD Grinds Higher, Targeting 1.6440

Technical Sentiment: Bullish

Key Takeaways

• EUR/NZD bounced off the 200-Day Simple Moving Average last week;
• With a Higher Low in place, buyers are back targeting the previous High;
• ECB President Draghi Speaks on Thursday, the only potentially large event in the calendar for Euro.

The euro currency is still able to slowly grind higher against a basket of currencies, including the Sterling Pound, Kiwi and Canadian Dollar. Of all pairs, EUR/NZD is the one resuming the strongest uptrend configuration after completing a technical correction.

 

Technical Analysis

EUR/NZD has been trending higher since late July, pricing Higher Highs and Highs lows on the large timeframes. After last week’s correction, when price plummeted from 1.6441 down to a strong support cluster at 1.5990 (marked by the 200-Day Simple Moving Average and a perfect confluence between two Fibonacci retracement levels), buying momentum is increasing at a steady pace. EUR/NZD is on its way to end the 4^th consecutive positive day and the rally is most likely going to accelerate now that 1.6200 resistance level has been left behind.

Stochastic declined from overbought territory in recent days. Now that a fresh Higher Low is in place on the 200-Day Simple Moving Average the uptrend is free to continue, at a minimum targeting the previous top at 1.6441. EUR/NZD is currently trading around 1.6260 following a surge in late European trading / early U.S. trading session. While this uptrend is expected to continue from this point forward, a decline below 1.6200 should put buyers on alert as the pair might relinquish the bullish bias in favor of further consolidation between 1.60-1.62.

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Prepared by Alex Z., Chief Currency Strategist at Capital Trust Markets