EUR/NZD is testing the top of its consolidation pattern!
Will we see a breakout in the next few trading sessions, or will euro bears and Kiwi bulls step in again to keep the pair contained inside the triangle?
Here’s what we’re seeing on the 4-hour time frame:
EUR/NZD 4-hour Forex Chart by TradingView
The Reserve Bank of New Zealand (RBNZ) flagging that “monetary policy is likely to remain accommodative for some time” got traders selling Kiwi like it’s going out of style.
The euro isn’t exactly shining either, with uneven business PMI expectations later this week likely capping demand.
Will these themes lead EUR/NZD to break above its current consolidation?
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!
EUR/NZD has been stuck inside a triangle pattern since late January, and, after the RBNZ’s “dovish hold” event, the pair is now pressing up against the top of that formation.
What makes this resistance zone more compelling is the confluence. The trend line lines up with the R1 at 1.9751, last week’s resistance, and sits just below the 4-hour 100 SMA. That’s a pretty crowded ceiling!
If today’s momentum extends, EUR/NZD could push toward the R2 at 1.9865 or even the 1.9900 psychological area near the 200 SMA.
But if the first red candlesticks show up and price slips back under the 100 SMA, then a move toward the 1.9600 trend line support is on the table, with S1 at 1.9539 as the next downside target.
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.
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