EUR/NZD has been in a steady downtrend, as the ECB rate cut has weighed on the euro’s value. At the same time, the recent RBNZ rate hike is keeping the New Zealand dollar afloat against its major forex counterparts.
The pair has just come off a test of channel resistance near the 1.5625 levels. Stochastic is indicating that a bearish divergence is playing out, which means that there’s enough momentum to sustain a drop until the bottom of the channel around 1.5530.
Shorting at market with a stop above 1.5625 and a target at 1.5530 could yield a 1:1 return on risk for a quick day trade.
By Kate Curtis from Trader’s Way