Potential signal:
- I am a buyer of this pair right here, right now.
- I would have a stop loss at the 1.7450 level and be aiming for the 1.7825 level over the next several weeks.
The euro rallied during the early hours on Thursday, but it's worth noting that the ECB has cut interest rates. This caused a little bit of a pullback in the middle of the session. But when you look at the longer term charts, we are very close to a major support level, which is based on the 1.75 level at this point.
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The major central banks around the world do look like they are trying to get close to cutting rates, and one has to wonder how long it will be before New Zealand does. Ultimately, this is a market that is oversold, and it is near a major support level in general. So, I do think you have a situation where traders will continue to look at this through the prism of finding value.
If we can break above the 1.77 level, then I think you have real potential for the market running to the 1.79 level, maybe even the 1.18 level. If we were to break down below the 1.74 level, clearing the massive support, then we could have a major breakdown in this EUR/NZD pair and we could see the euro drop down to the 1.7250 level.
In general, I think this is a rangebound market, and I think it's going to stay a range bound market from a longer term standpoint. And as we have sold off quite drastically, I do believe that we will get a bounce sooner rather than later. Keep in mind that this is a somewhat out there type of currency pair. So it does tend to be very noisy and you need to position the size accordingly.
Keep in mind that there are a lot of crosswinds at the moment, so to be difficult to understand exactly what the pair is going on a day-to-day basis. However, I do think that we are closer to the bottom then the top, and that might be as clear as it gets.
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