EUR/NZD sharp reversal up ahead of EU’s data on Wednesday

  • EUR/NZD will likely take its cues from the Eurozone macroeconomic data on Wednesday and the ECB Monetary Policy Meeting Accounts on Thursday. 
  • EUR/NZD reverses its losses made in Asia and is set to close on the high tick on Tuesday close to the 1.7000 handle.

The EUR/NZD cross found an intraday floor at 1.6963 in early Europe. It then sharply rebounded to reach 1.7021 in the second part of the American session and tested the 200-period simple moving average (SMA) on the 4-hour time-frame. The cross is currently trading at around 1.7000 up 0.16% this Tuesday.

The euro gained some ground against the kiwi as the pair tested the 1.6964 swing low and the 100-period SMA on the daily time-frame. 

Coming up on Wednesday, euro investors will watch the preliminary Eurozone and German Markit PMI (Purchasing Managers' Index) monthly Composite, Manufacturing, and Services reports for May as well as the preliminary German Gross Domestic Product for May. If that data beat market´s expectations the EUR should be supported in the short-term. 

In New Zealand, Wednesday will see the trade balance and the import/export data which are not expected to be strong market-movers.

Looking further into the week on Thursday, the ECB Monetary Policy Meeting Accounts is set to be released. The report will give investors an overview of financial markets, economic and monetary developments in the Eurozone. Euro bulls will closely look for hints of rising growth and inflation.

EUR/NZD 4-hour chart 

The EUR/NZD cross is evolving in a trading range with the main SMA being relatively flat. The cross is attempting to form a double bottom with May 9 low. Bulls will likely meet resistance at the 1.7000 handle, the 0.7050 previous support/resistance level and at the 1.7169 swing high. To the downside, support lies at the 1.6950 demand zone, followed by 1.6892 swing low and 1.6768 swing low and demand level. 

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