EURNZD held its ground in the Europen morning, however, faces a big resistance near 1.74. The area is marked by the 23.6% Fibonacci retracement of the bearish leg starting at 1.8268.
Despite weak demand for the euro has kept the pair under pressure since March, prices seem to reverse. This is evident amid the recent bounce at the lower regression channel that started on Jan 1. In addition, the surge was followed by a strong breakout above the major descending trendline TR1.
With the RSI (14) showing a hidden bullish divergence, prices launched off the 1.72 round support in the hopes of recording fresh 2020 highs.
In the short-term, an additional critical level lays ahead at 1.7454. This is where the 61.8% Fibonacci expansion of the last upside impulse meets the median regression of the ascending channel.
Any of the said levels could cap gains and offer either a sideways or a corrective pullback. This is likely to reinforce the broader upside bias.
We expect the entire rally to complete near the 50% Fibonacci retracement of the 1.77 round resistance. This comes in confluence with the upper regression channel.
Whilst subsequent Fibonacci levels are expected to maintain ranges higher, we also expect EURNZD weakness to offer short-lived retracements.