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:
- Wall Street opens higher on hopes of economic recovery
- Oil prices up after Saudi pledge on cuts eases some glut fears
- China announces new tariff waivers for some U.S. imports
- The Fed is starting its program to purchase corporate bond ETFs
- April consumer prices post the largest drop since 2008
- U.K. government to keep paying wages of furloughed workers until end of October as jobs scheme extended
- More monetary easing in the UK ‘quite possible,’ BOE deputy governor says
- Japan coincident index drops 4.9 points to 90.5 m/m, the fastest pace since March 2011
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
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.
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.