By: Mike Kulej
Recent developments in Europe took its toll on the common currency. The Euro fell sharply in relation to most other major currencies, including the New Zealand Dollar. In less than a month, the EUR-NZD declined from 1.8700 to 1.7400.
Lately though, this pair has spent just as long moving nowhere. At first, it stayed in a trading range between 1.7800 and 1.7450, only to move into an even more narrow congestion zone from 1.7600 to 1.7400. It is clear that the EUR-NZD needs a catalyst of some kind to push it either way and decide direction of the next move.
On Wednesday, all of NZD pairs could get a jolt. The Reserve Bank of New Zealand holds its policy meeting, during which the interest rates are will be decided. Currencies often respond sharply to these events, and this one could be no exception.
In case of the EUR-NZD, this means that the sideways movement could end. A breakout above 1.7600 or below 1.7400 might indicate which path the next major price swing will take. Present shape of the price action on this intermediate term chart resembles a rounded bottom. This favors a bullish move. However, announcements by central banks often override the technical picture, so one has to be open-minded.
EUR-NZD Awaiting RBNZ Rate Decision
DailyForex.com