The EUR/NZD pair fell yet again during the session on Thursday, breaking down below the 1.55 support level. However, you can see that we bounce back above it and now the question then becomes whether or not we can continue lower. Ultimately, I believe that we can, but a bounce could happen from this general vicinity as it is a large, round, psychologically significant number. However, you can also see that there is a cluster going all the way to the 1.57 level, showing significant consolidation. A bounce from here will more than likely find quite a bit of resistance near the 1.57 level, and most certainly at the 1.58 level which was massive support previously.
The New Zealand dollar gaining against the Euro is more or less going to be a symptom of quantitative easing coming out of the Federal Reserve, as well as the European Central Bank. The ECB really hasn’t done it yet, but there does seem to be expectations that the Europeans will have to do something along the lines of quantitative easing, and that should run money into the commodities markets as people will look to buy “things” to store value.
The market is in a nice downtrend, so no need to fight it.
I don’t think there’s any reason to fight this obvious trend. On top of that, I believe that the New Zealand dollar is on the brink of breaking out to the upside against the US dollar, which of course would be the main driver of the value of the New Zealand dollar. If we can get above the 0.88 handle on the NZD/USD chart, this market should follow suit and start to see significant New Zealand dollar strength. A move below the lows for the Thursday session should send this market looking for the 1.50 level, which of course is a massive large round number that the market will certainly sit up and take notice of. However, we certainly have enough room to make a shorting opportunity interesting and I am looking to sell either on the aforementioned breakdown, or on a resistant candle above.
