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EUR extends its losses against NZD and GBP

Market Analysis

EURNZD , H4

Eurozone ESI economic confidence rose to 114.6, in line with expectations and up from 114.1 in the previous month. This is the highest reading since October 2000 and a further confirmation that the Eurozone recovery is stronger than anticipated, with improvements across industrial services and consumer confidence. The latter was confirmed at 0.1, in line with the preliminary reading and the first time since August 2000 that the reading is in positive territory.  Warmer than expected German state inflation figures, in data released earlier, have also helped keep the euro bid.

However despite data, Euro has bee traded mixed so far today, with losses to be continued against Pound, US dollar and New Zealand Dollar.  Kiwi and Pound seem to extending their gains against EUR, since EURGBP and EURNZD are traded lower for a 3rd consecutive day. EURNZD, is  traded in an up-channel since August, however it seems that it is struggling against the strong resistance seen at 1.7395. The pair formed a double Top formation as seen in a 4-hour chart, since November 17. The bottom of the double top formation comes around the neckline at 1.7145-1.7120 area. Significant is the fact that the neckline coincides with 38.2 Fibonacci level set since November 8This pair is currently traded within this area, while it manage to break yesterday the last low fractal a week ago.

Therefore this week presents an intra-day bearish outlook for EURNZD, with the 4-hour price action retesting the 1.1710 level (38.2& Fib & Neckline) and moving below the confluence of 20, 50-period MA and 23.6 Fibonacci level, since Monday. Intra-day momentum indicators present a downside momentum as well, with Stochastic pivoting around oversold territory and MACD turned negative.

Hence an intra-day Short position was taken at the 38.2 FIb level, at 1.7110,  with Target 1 at 1.7050 and at 50.0 Fib. level. at 1.7015.  Support was set at 1.7225. A break of 50-period MA will trigger another target at 200-period MA. This position was initially in a watch list since the break of 20-period MA at 1.7145 in the hourly chart.

Nevertheless, on euro weakness seen this week against some major currencies, another entry was taken at EURGBP,  while our EURJPY entry taken on Monday hit Target yesterday, and EURCHF entry taken yesterday still holds.

An entry was taken in EURGBP on the break of the Thursday’s low fractal, at 0.8845, after a break below the triangle identified and the pair traded below 50 Day MA, in the low Bollinger Band pattern.  Intraday target was set at 0.8815  and a Daily Target  at 200-Day MA at 0.8793.

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Andria Pichidi

Market Analyst

HotForex

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