- The Euro has rallied a bit against the New Zealand dollar, but there's an area right around the 1.97 level that continues to be a bit of a barrier, and we have in fact seen this pair drop from that level.
The initial push higher seems to be rolling over, and now it looks like we are trying to get a bit of a crossover between the 50-day EMA and the 200-day EMA, kicking off the so-called death cross.
Analyzing the Risk-On Dynamics
That actually is a risk-on move here because the New Zealand dollar is considered to be riskier than the Euro, so this isn't even necessarily bad news for the markets. I think you've got a situation where traders will continue to see this market as being very noisy, as it typically is. But if we can break above the 1.97 level, then it opens up the possibility of challenging those moving averages.
If we fall from here, I'll be looking for a challenge of the 1.94 level. Keep in mind that the Euro is considered to be maybe a secondary world's reserve currency, might be a way to describe it, while the New Zealand dollar is highly leveraged to commodity markets and Asia, and in fact, it's leveraged to soft commodities such as milk.
So, if there's a run to safety, the Euro does fairly well. If risk appetite starts to pick up, the New Zealand dollar should, at least under normal circumstances, pick up a little bit of momentum.
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