EURNZD Crashes to New Thirteen-Month Low, Exposes 1.50 >Click Here

Recent global events continue to put pressure on the Euro while currencies like the New Zealand dollar have been surprisingly resilient. This imbalance puts EURNZD back in the spotlight, a pair that has now lost 1,600 pips over the last two months and looks to continue that trend with yesterday’s close.

I mentioned the Euro cross on June 27th as it was treading water below the 1.5840 handle. One of the targets for that setup was 1.5400, which was reached and then some during yesterday’s session.
From here, traders can watch for a retest of this level as new resistance. As long as it holds on a daily closing basis, the bias will remain weighted to the downside. The next critical support doesn’t come in until 1.50, giving traders 400 pips of real estate.
Aside from it being a psychological number, the 1.50 area is the 2012 low. It also served as support for a brief period in May of 2015, giving rise to a 3,600 pip rally that ended with last August’s infamous volatility.
As mentioned in my earlier commentary on EURUSD, tomorrow is NFP Friday with the event kicking off at its usual time of 8:30 am EST, so do expect an increase in volatility. Of course, a currency cross like EURNZD is relatively insulated from US-based events, even one as impactful as non-farm payrolls.

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EURUSD Bearish Pressure Remains Despite Recent Bids. Click Here>

On Tuesday I mentioned the key inflection point on EURUSD near the 1.1200 handle. Shortly after that commentary, the single currency sold off against the US dollar, closing the day in the red by 78 pips and engulfing the previous two sessions in the process.

However, Tuesday’s session closed just 14 pips above the 1.1060 level, an area that was likely to act as support. The proximity to 1.1060 rendered any attempt at a short position unfavorable.
The question now becomes – is the bearish engulfing candle a sign of what’s to come or will buyers at 1.1060 overcome its technical implications?
While it’s too soon to make that call with any degree of confidence, my bias remains weighted to the downside.
My reason for this is simple. The post-Brexit close below channel support that extends from December of last year casts a bearish shadow over the pair. As long as former support holds as new resistance on a daily closing basis, this bias will remain.

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EURUSD Reaches Key Inflection Point .Click Here.

EURUSD is in the process of retesting the area I mentioned over the weekend. The 1.1200 region includes a key pivot that dates back to early 2015 as well as former channel support that extends from the December 2015 low.

Additionally, the level is the 38.2% Fibonacci retracement when measuring from the December 2015 low at 1.0515 to the 2016 high at 1.1615.
Ideally, I’d like to see a clear rejection of the former support area as new resistance on a daily closing basis. Alternatively, a break below the intraday channel that has formed could be a sign that the relief rally has exhausted its resources.
Either scenario would indicate a shift in sentiment that could send EURUSD lower in the coming sessions.
The first stop on a move lower would be 1.1060 followed by post-Brexit lows near 1.0940. But regardless of the bids that develop at these levels, I remain quite bearish here and think that the 2015 lows near 1.0515 will come under fire again before year end.
As for upcoming event risk that could affect the EURUSD, Mario Draghi speaks tomorrow at 4 am EST and US non-farm payrolls (NFP) are scheduled for release this Friday at 8:30 am EST.
Both events could trigger an increase in volatility for the pair, especially the always dependable NFP, which never seems to disappoint when it comes to shaking things up for US dollar pairings.

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