The RBNZ decision spurred a strong rally for the Kiwi, but is it enough to break below the floor on EUR/NZD?
Or will buyers defend the support zone?
Before moving on, ICYMI, today’s Daily Asia-London Session Watchlist looked at the range support on AUD/NZD ahead of the RBNZ statement. Be sure to check that out to see if there is still a potential play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
- RBNZ kept interest rates on hold at 0.25% as expected
- RBNZ: Forward projection of OCR suggests possible hike on Sept 2022
- RBNZ Governor Orr: Inflation is strong but likely temporary
- Australia’s MI leading index up by 0.2% in May
- Australian construction work done up 2.4% vs. 1.9% in Q1 2021
- Asian markets boosted by weaker dollar as Fed officials downplay inflation
Upcoming Potential Catalysts on the Economic Calendar:
- FOMC member Quarles’ testimony at 2:00 pm GMT
- U.S. crude oil inventories at 2:30 pm GMT
- BOC Governing Council member Lane’s speech at 5:00 pm GMT
What to Watch: EUR/NZD
Kiwi bulls charged during the RBNZ statement and presser, as the central bank hinted that they could tighten policy earlier than previously expected.
This could take EUR/NZD all the way down to the bottom of its range visible on the 4-hour time frame.
Will support hold?The coast is clear in terms of economic data from the eurozone today, so this pair’s moves could mostly depend on whether or not Kiwi bulls are exhausted.
Looking at the average daily volatility of EUR/NZD reveals that the pair has already covered its usual movement around this time of the week, so profit-taking could happen pretty soon.
If that’s the case, the range support could hold and might lead to a quick bounce at least until the middle at 1.6850. The 100 SMA is above the 200 SMA after all, and Stochastic is closing in on the oversold region.