Euro Breaking Out Against New Zealand Dollar?

The Euro had a very bullish trading session on Tuesday, breaking through a trend line against the New Zealand dollar that has been very negative for some time. Beyond that, we have broken above the 50-day EMA as well, both of which are rather bullish size.

The beginning of the day started out somewhat bearish but we found enough buyers underneath the 1.65 level to turn things around. Quite frankly this is a market that has a bit of a cross current in it, because the Euro is losing ground to the US dollar, but the New Zealand dollar is absolutely cratering. The Royal Bank of New Zealand has recently suggested that its next move is probably interest-rate cuts, and that of course has the markets turning around against the very same Kiwi dollar.

Beyond that, you can see that there is a massive candle stick from last week after that announcement, and we are currently breaking the top of it as I record this video. With that being the situation it looks as if we could get a big move to the upside. Obviously, the 1.65 level underneath would be an area of interest as far as support is concerned, so the risk to reward ratio most certainly is working out in the favor of buyers. With the New Zealand dollar getting hammered against most other currencies, even with a soft Euro, this trade does make a bit of sense. Alternately, if we were to break down below the 1.64 level then obviously it will have been a significant “false breakout.”

If this is in fact a bit of a trend change, these are very slow moving events, so therefore a lot of patience will be needed to take advantage of any particular shot to the upside. I believe that the 1.6750 level, and then the 1.6850 level both could offer trouble, but they are minor resistance barriers.

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