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Kiwi VS EUR and USD

Market Analysis

NZDUSD and EURNZD, H4

The dollar has perked up after clocking fresh lows against a number of currencies earlier in the London AM session. EURUSD has back to near 1.1750, leaving a two-day peak at 1.1773 while USD-JPY has recouped to around 112.10 after clocking a low at 111.95, which matched Monday’s low. The interbank and speculative markets seemed too wary of today’s release of the FOMC minutes to push the buck too low, as they should at the least affirm that the Fed remains on track for a 25 bp hike at the December 12th-13th FOMC.

NZDUSD, pulled back to 0.6820 from overnight’s highs of 0.6853, which came following dollar weakness , failing with this way to break above November’s down trendine. The pairing traded below year lows the last two weeks, and has turned increasingly bearish after breaking below the 50-Day MA and 200 Day MA since September and October respectively. Meanwhile in November a confirmation of a strong bearishness in the particular pair came with the crossing of 50 DMA and 200 DMA. The bearish attitude of the Kiwi has been strengthened after the break of the round 0.7000 level, with momentum indicators  falling in with this. Only a break above the 20-Day MA at 0.6880 or even above the 0.7000, could suggest limitation of the current negative momentum.

The Daily MACD remains strongly negative since August, while Daily RSI and Stochastic keep moving slightly above the oversold line at 33 and 19 respectively. The H4 indicators on the other side, after configurated positively on morning’s peak, now they turned lower, with Stochastic sloping below 80, RSI at 46 and MACD remaining negative.

Today’s slide from 0.6853 high along with lower highs and weak small body candles seen earlier in the 4-hour chart, triggered a Short position, with entry at 0.6822. Targets have been set at recent lows, at 0.6800 and 0.6780 and support at 0.6845-0.6855 area.

Elsewhere, another interesting Kiwi cross is EURNZD, which is traded in an up-channel since August, by making higher highs and higher lows. The price action has retraced over 70 % (1.7070) of the fall seen since 2015.  After new year high at 1.7407 on Friday, this week pair formed 2 negative Daily candles, which suggest that price action is looking for a correction of the channel.  Momentum indicators are giving mixed signals, with MACD remaining positive, in contrast to Stochastic that turned lower yesterday below the overbought territory.

However only a break below the 2 week’s support at 1.7115 (50-period MA at 4 hour chart)  or below 1.7070 (70% retracement), could suggest that upside momentum is under pressure and to target the next support level at 1.6830. After that the next support will be 50-Day SMA which seems to sufficiently support the EURNZD. If pair holds above 1.7100 then bullish outlook still remains.

 

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Andria Pichidi

Market Analyst

HotForex

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