The risk aversion which has gripped markets so far this year continues to see the Euro supported as its funding-currency capacity fuels demand during healthier periods of investor risk appetite and selling during risk-off period as carry trade and hedges are unwound. A key factor affecting risk appetite this year has been the continued slide in Oil prices, which has dragged equity markets lower, and continues to lasso any upside momentum in commodity currencies. Recently Oil prices have stabilised somewhat as hopes build for an OPEC deal to challenge the huge oversupply that is burdening Oil markets but hopes for a deal remain tentative and Oil is prone to downside shocks on news of deterioration in the outlook for a deal. The New Zealand Dollar which has recently recovered ground on a correction in Oil prices and confluent USD weakness, is vulnerable to further medium term selling as Oil remains capped by the key $34.50 resistance level.
EURNZD is curently challenging key resistance with bullish Order Flow and VWAP supporting, having broken above the short-term descending trend line. A break of 1.6852 should see bullish momentum unleashed with a run back up to 1.71 initially.
Buy a break of 1.6852 with a 150 pip stop targeting 171.
Update: Target was nearly hit last night, moving stops to entry. Will exit trade at retest of of 1.7052 -09/02/2016
Update: Exit trade at 1.7052 + 200 pips 09/02/2016