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Technical analysis of EURNZD

November 26, 2020
BY Michael Stark

The euro’s decline against the Kiwi dollar has continued this week although at a slower pace as sentiment in markets remains generally positive and ‘risk on’ is holding for now. Key data from both New Zealand and the eurozone since last night have been somewhat poor, with the former’s trade deficit still more than half a billion Kiwi dollars and German GfK consumer confidence posting a six-month low at -6.7. This technical analysis of EURNZD looks at the four-hour chart.

There is no clear high resistance on this chart but the psychological area of $1.80 might be important if the trend reverses abruptly. Areas from moving averages are likely to be more noteworthy over the next few days, though. The main support in view is the other psychological area around $1.70 which is currently being tested.

Technical indicators on EURNZD H4

Moving averages continue to give a strong sell signal, with the 50 SMA from Bands below the 100 and both significantly above the price. The 50 SMA is likely to be the most important resistance from moving averages into next week.

There is currently no sign of saturation from either Bollinger Bands (50, 0, 2) or the slow stochastic (15, 5, 5). The latter at about 44 is close to neutral. Volume remains consistent with the average in November so far.

Price action and Fibonacci

Despite what looked like a promising bounce a fortnight ago, the fundamental downtrend has continued since then. Tuesday morning GMT saw a nine-month low below $1.70 with a fairly weak bounce following this test of the important support. Another lower high from the current short bounce would probably presage a retest of $1.70 and possibly a new low on this chart.

The daily Fibonacci fan remains in focus on this chart with price appearing reluctant to move below the 50% zone. To the upside the 61.8% area of the same fan could be a third resistance if both moving averages are tested successfully over the next few weeks. Otherwise the 100% daily Fibonacci retracement area, i.e. full retracement of all the euro’s gains in the first quarter of 2020, might cap more deep losses around $1.673.

Technical analysis of EURNZD: summary

The technical picture for euro-Kiwi dollar remains on the whole quite negative. More losses might be expected into next week. Releases of note coming up include final ANZ business confidence for November at midnight GMT on Monday, various German job data on Tuesday and of course the NFP next Friday.

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