It looks to be a pretty quiet start to the week for forex traders, but with ECB President Christine Lagarde speaking to the European parliament and New Zealand business confidence data ahead, the strong trend in EUR/NZD is one to watch for opportunities.
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Fresh Market Headlines & Economic Data:
Upcoming Potential Catalysts on the Economic Calendar for U.S. & Asia:
Japan Average Cash earnings at 11:30 pm GMT
New Zealand Business confidence at 1:00 am GMT (June 9)
Australia Business confidence, Job Ads at 1:30 am GMT (June 9)
What to Watch: EUR/NZD
Without major economic/news catalysts and no significant shifts in risk sentiment, it’s definitely a slow start to the new week. But we could see a short-term pick up in volatility for the euro after ECB President Largade’s speech to the European parliament.
So far, the reaction seems to be muted as we didn’t get any significant developments from her comments, but now we’re passed the only event of interest of the morning, traders who were looking to avoid event risk may decide to make moves now.
Beyond that event, we’re looking forward to the next set of potential catalysts in the upcoming Asia session, most notably, the latest business confidence data from New Zealand.
It’s not normally a market mover, but we can’t rule out the possibility that it could breathe life into EUR/NZD, which has been in a strong trend lower since the beginning of May.
If so, and we see a retest of last week’s consolidation area (roughly between 1.7420 – 1.7580), watch out for bearish reversal patterns and a continued risk-on environment before considering a short position.
For the bulls on the pair, it looks like we may get a bounce based on the Stochastic signal mentioned above.
And if the NZ business confidence data disappoints more than expected, a move back to the major 1.7500 handle is not out of the realm of possibilities given the daily ATR of around 191 pips.
Longing at current levels is a high-risk bias at the moment, so it’s a good idea to watch out for a shift in broad risk sentiment before buying, and/or some really bad business confidence data/bearish Kiwi reaction from New Zealand to emerge.