The European Central Bank (ECB) is up today!
Will the central bank members’ decision extend the euro’s losses against its some of its counterparts?
In case you were watching other EUR pairs, you should know that EUR/NZD has been in an observable downtrend since hitting resistance at the 1.7840 levels.
The pair is now trading closer to the 1.7450 area after hitting new monthly lows near 1.7400.
EUR/NZD: 1-hour
Can the pair still extend its losses?
The 1-hour chart hints that EUR/NZD went back inside its descending channel pattern after a brief trip to the 1.7400 lows.
If we zoom in on the 15-minute time frame, we can see that the next potential short-term resistance is around the R1 (1.7530) of today’s Standard Pivot Points.
Not only is it near the mid-channel resistance, but it’s also close to yesterday’s highs and the halfway point of EUR/NZD’s daily average volatility.
EUR/NZD: 15-min
Today’s ECB decision could take EUR/NZD to the potential resistance that we’re looking at.
Markets see President Lagarde and her team raising their interest rates by 25 basis points and likely hint at further rate hikes in the foreseeable future.
But based on how EUR reacted in the previous rate hikes, and based on how markets eventually turned against USD after Powell’s presser, EUR could turn lower despite a rate hike.
This is why I’m more bearish than bullish on EUR/NZD in the next couple of trading sessions.
EUR/NZD could spike to 1.7550 – 1.7560 during the ECB event before revisiting its previous lows near 1.7450.
It could even drop to 1.7400 if traders decide to dump USD and take “risky” bets like NZD ahead of the weekend!
Of course, I’m willing to target higher resistance zones if EUR ends up extending its gains after the ECB event.
But for now, I’m watching out for an opportunity to short near the mid-channel resistance and targeting EUR/NZD’s 1.7450 – 1.7400 previous lows.
