We don’t know if you’re watching EUR/NZD’s long-term prospects but you should know that the pair traded below a long-term trend line support back in November 2023.
EUR/NZD found support at the 1.7500 area, though, and now it’s back at the broken trend line area.
And why not? Hawkish comments by European Central Bank (ECB) members have ensured at least some demand for the euro. Meanwhile, global growth concerns and escalating geopolitical tensions in the Middle East have weighed on commodity-related assets like the New Zealand dollar.
EUR/NZD Daily Forex Chart by TradingView
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 euro, then it’s time to check out the economic calendar and stay updated on daily fundamental news!
EUR/NZD is currently consolidating at the 1.7800 – 1.7850 area, which is just below the R2 (1.7880) Pivot Point line on the daily time frame. More importantly, it lines up with the broken trend line support AND the bearish SMA crossover on the daily chart.
Will we see a break-and-retest scenario in the next couple of days?
Watch how EUR/NZD reacts to the resistance zone we’ve identified. Bullish candlesticks above the SMAs and the R2 Pivot Point line opens up the possibility of EUR/NZD returning to its months-long uptrend and the pair retesting the 1.8000 psychological level.
In fact, an upside breakout coupled with a fundamental catalyst may push EUR/NZD all the way to its 1.8200 previous highs.
But what if EUR/NZD gets rejected from the broken trend line? Decisively bearish candlesticks, coupled with a bit of momentum, could draw in enough bears to support a long-term trend reversal.
Look out for consistent trading below the 1.7800 area which could attract enough bears to drag EUR/NZD to the 1.7500 previous support.
Whichever bias you choose to trade, make sure to consider EUR/NZD’s average daily volatility when making your trading plans so you don’t get blindsided by extra volatility!