The RBNZ interest rate statement is coming up, which means that Kiwi pairs could be in for some volatility this week. Here’s what I’m watching on EUR/NZD.
Long EUR/NZD Idea
I already missed the chance to buy this pair on a dip to the longer-term ascending channel support around the 1.5600 major psychological level, but I’m seeing another opportunity to hop in a long position if it shows more bullish momentum.
Price is currently hovering close to the mid-channel area of interest at the 1.6100 mark and a break higher could indicate that more buyers are joining in. Stochastic is still pointing up anyway, which means that bullish momentum is present.
I’m counting on the upcoming RBNZ interest rate decision to push price up to the channel resistance around the 1.6600 major psychological mark. As Forex Gump summarized in his New Zealand Economic Snapshot, inflation and employment have weakened so there might be good reason for the central bank to sound cautious.Besides, the RBNZ has also been known for jawboning the Kiwi from time to time. After all, they’d like to see a weaker local currency that would support demand for their export products and stoke domestic price levels as well.
As for the euro, the shared currency has slowed in its climb recently but I’m hoping another round of upbeat medium-tier data from its top economies could keep tapering expectations in play. Apart from that, the euro seems to be acting as a safe-haven of sorts in the European region once more as the pound got bogged down by a less hawkish BOE announcement and the franc remains vulnerable to SNB intervention.
Here’s what I’m looking at:
Long EUR/NZD at 1.6125, stop loss at 1.5676, initial profit target at 1.6575 for a simple 1:1 play. I’ll risk 0.5% of my account on this setup.
I’m open to rolling my stop up and aiming higher depending on the outcome of the RBNZ decision. If price tumbles after the announcement, I can consider going long at a better price around the 1.5600 channel support as well.
See also: Q2 2017 Trading Performance Review
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