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We’ve got a potential action coming for the Kiwi with the latest monetary policy decision from the Reserve Bank of New Zealand just ahead. To play that, this consolidation setup in EUR/NZD is definitely one to watch.

Before moving on, ICYMI, today’s Daily London Session Watchlist looked at an opportunity forming on NZD/JPY after strong bearish momentum, so be sure to check that out to see if there is still a potential play!

Equity Markets Bond Yields Commodities & Crypto
DAX: 10823.59 -0.74%
FTSE: 5929.26 -0.11%
S&P 500: 2916.01 -0.47%
DJIA: 24135.78 -0.80%
US 10-yr 0.688% +0.007
Bund 10-YR -0.527% +0.005
UK 10-YR: 0.255% +0.019
JPN 10-YR: 0.007 +0.011
Oil: 24.90 +0.65%
Gold: 1700.90 -0.75%
Bitcoin: 8858.04 +2.25%
Ethereum: 187.71 +0.60%

Fresh Market Headlines & Economic Data:

Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:

  • Fed Harker speech at 4:00 pm GMT
  • U.S. Monthly Budget statement at 6:00 pm GMT
  • API Crude oil inventory change at 8:30 pm GMT
  • Fed Mester speech at 9:00 pm GMT
  • U.K. Retail sales monitor at 11:01 pm GMT
  • Japan Current account at 11:50 pm GMT
  • Australia Consumer Confidence, Wage Price index at 12:30 am GMT (May 13)
  • Reserve Bank of New Zealand monetary policy statement at 2:00 am GMT
  • Japan Eco Watchers Survey at 5:00 am GMT (May 13)

What to Watch: EUR/NZD

EUR/NZD 1-Hour Forex Chart
EUR/NZD 1-Hour Forex Chart

Looking ahead, we’ve got the latest monetary policy decision from the RBNZ to give us the best chance of sparking volatility in the currency market.

Expectations are for no interest rate changes at this meeting, but as we’ve seen in the past, the RBNZ can surprise us.

So, with the potential for volatility in the Kiwi to pick up, a consolidation-breakout setup makes sense to watch, and we do see one brewing in EUR/NZD on the one-hour chart above.

The pair has been in a pretty steady decline since mid-March, presenting fresh shorting opportunities with every bounce.

We’re currently seeing one at the moment as the pair rallied this week from the 1.7600 low to retest the broken previous support (around 1.7850) / Fibonacci retracement area.

If you’re a bear on the pair, the conditions look ripe for a fresh short position if the Kiwi rallies off of the RBNZ event to break the current consolidation pattern in EUR/NZD.

This scenario is hopefully off of surprisingly not-so-dovish RBNZ commentary, which would increase the odds of success of this setup.

If you’re a bull on the pair, anticipating dovish rhetoric or more stimulus talk from the RBNZ (low probability considering RBNZ Governor Orr’s recent remarks), then a break above the Fibs / consolidation pattern is the signal to start building a long position. 

This idea especially makes sense if global risk sentiment shifts negative (likely putting pressure on the Kiwi) during the session, a possibility given the recent fears of a potential second wave of COVID-19 cases.