EUR/NZD has formed higher lows connected by an ascending trend line, and it looks like another test of support is in order.
Or are we about to see a breakdown and reversal soon?
Better keep close tabs on these retracement levels!
EUR/NZD 4-hour Forex Chart by TradingView
The dovish RBNZ announcement continues to weigh heavily on the Kiwi, as traders appear to be pricing in yet another interest rate cut in their next meeting.
Meanwhile, the euro is drawing some support from improvements in mid-tier data, including the German Ifo business climate figure and upbeat flash PMI reports.
Can EUR/NZD sustain its uptrend from here?
Remember that directional biases and volatility conditions in market price are typically driven by fundamentals. If you haven’t yet done your fundie homework on the New Zealand dollar and the euro, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
The pair appears to be retreating from its latest rally, testing support at the pivot point level (1.9890) but still having room to pull back to Fibonacci retracement levels.
The 38.2% Fib lines up with S1 (1.9740) while the 61.8% retracement is closer to the rising trend line support, former resistance zone and the 200 SMA dynamic inflection point. Watch out for reversal candlesticks at these areas, as a continuation of the climb could take EUR/NZD back up to the swing high or the next upside target at R1 (2.0120).
On the other hand, long red candlesticks closing below the trend line support and S2 (1.9510) could clear the way for a selloff down to the next bearish targets at S3 (1.9360) then S4 (1.9220).
Whichever bias you end up trading, don’t forget to practice proper risk management and stay aware of top-tier catalysts that could influence overall market sentiment.
Disclaimer:
Please be aware that the technical analysis content provided herein is for informational and educational purposes only. It should not be construed as trading advice or a suggestion of any specific directional bias. Technical analysis is just one aspect of a comprehensive trading strategy. The technical setups discussed are intended to highlight potential areas of interest that other traders may be observing. Ultimately, all trading decisions, risk management strategies, and their resulting outcomes are the sole responsibility of each individual trader. Please trade responsibly.
