EURNZD has been trending higher on its 4-hour time frame and is testing the ascending trend line connecting the lows since late July.

This support level lines up with the 38.2% Fibonacci retracement level and if it holds as support, price could bounce back up to the swing high at 1.6700. 

The 100 SMA is above the longer-term 200 SMA so the path of least resistance is to the upside. In addition, the 100 SMA is close to the 50% Fib, which could act as an extra layer of support in the event of a deeper pullback. Stochastic is already indicating oversold conditions and is turning higher to suggest a return in bullish pressure. 

Data from New Zealand turned out stronger than expected as the GDT auction yielded a 0.3% rebound in dairy prices. On the other hand, final services PMI readings from the euro zone’s top economies came in mostly weaker than expected, dragging the shared currency down. 

German factory orders, Italian retail sales, and the region’s retail PMI are up for release today and another batch of downbeat reports could spell more euro weakness. There are no reports due from New Zealand for the rest of the week so Kiwi price action could hinge mostly on market sentiment, with easing fears of a North Korean missile strike likely boosting the higher-yielding currency.

Another event risk for the euro is the ECB statement later in the week as hopes are running high for upbeat remarks or any tapering hints. Recent euro zone CPI estimates have printed stronger than expected results but there have also been rumors of policymakers being unhappy with the shared currency’s appreciation lately. 

By Kate Curtis from Trader’s Way