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Will this short-term rally in EUR/NZD potentially about hit a wall of sellers soon? Check out the technical picture and potential catalysts ahead.

Intermarket Snapshot

Equity Markets Bond Yields Commodities & Crypto
DAX: 11602.46 +0.26%
FTSE: 7198.47 +0.55%
S&P500: 2806.87 -0.14%
DJIA: 25671.05 -0.12%
US 10-yr 2.621% +0.011
Bund 10-YR 0.075% +0.009
UK 10-YR: 1.222% +0.023
JPN 10-YR: -0.042% +0.002
Oil: 58.57 +0.53%
Gold: 1293.80 -1.18%
Bitcoin: 3851.95 -0.00%
Etherium: 131.09 -0.02%

Fresh Market Headlines & Economic data:

Upcoming Potential Catalysts on the Forex Calendar:

  • EIA natural gas storage data at 2:30 pm GMT
  • U.K. Parliament votes on Brexit extension (tentative)
  • New Zealand manufacturing index at 9:30 pm GMT
  • New Zealand international travel and migration at 9:45 pm GMT
  • Bank of Japan monetary policy statement (tentative)

What to Watch: EUR/NZD

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

The potential catalysts of the Brexit extension vote and the upcoming Bank of Japan monetary policy decision is probably a little too big to take a short-term trade on for us, and with little else to potentially move the markets ahead for Thursday, this EUR/NZD is a clean setup to add to the watchlist.

On the one hour chart above, we can see the pair popped higher over the last sessions, now about test the broken minor support area that held in early March around the 1.6620 level. Stochastic is already showing potentially overbought conditions and turning lower, and this area also lines up with the 61.8% Fib retracement area from the 1.6726 to 1.6406 down swing move. So, sellers are likely eyeing this area for technical reasons.

If you’re bearish, watching this area for a potential short makes sense, but you should probably wait for the upcoming NZ manufacturing index data just after the Thursday U.S. session closes. If that comes out positive and we see reversal patterns back to the downside, the odds are pretty good sellers could jump in. And with the previous swing low well beyond the daily ATR of 60 pips at 1.6406, the potential R:R is pretty attractive.

For the bulls, if you do see a break higher, the potential R:R isn’t as attractive with the next resistance area around 1.6700, but it still might be enough to be worth the risk, especially if we see a big disappointment with the manufacturing sentiment survey.