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Market Outlook
EURNZD Give Signal to Drop?

EURNZD Give Signal to Drop?

02-02-2022 08:58

European Economic Growth Slows In Q4 Due to Omicron Hit

The Omicron wave of COVID-19 infections slowed eurozone economic growth in the final quarter of 2021 compared to the previous three months although the impact was much stronger in Germany than in France or Italy. The European Union's statistical office estimates that gross domestic product in the 19 countries that use the euro grew 0.3% quarterly in October-December 2021, significantly slowing from 2.3% growth in the previous three months. It's not just Europe that is overwhelmed by Omicron, New Zealand's Prime Minister Jacinda Ardern is also self-isolating, as New Zealand recorded 103 new COVID-19 infections.
In addition, the Euro is also being 'threatened' due to the recent heated political situation between Ukraine and Russia. Even Ukrainian civilians have been trained to use weapons and tactical strategies in anticipation of a Russian invasion. If a war does occur, the value of the Euro could fall even further in the future.

Quick Recap on EUR/NZD

EURNZD tends to range in the higher timeframe, but is very bullish on the lower timeframe.

Let's dive in a little deeper to see how EURNZD fare on multiple timeframes:

EUR/NZD Monthly Technical Analysis

EURNZD Give Signal to Drop?
Graph taken from TradingView.

EURNZD on the monthly timeframe is in the monthly resistance area. Indeed, this pair has closed bullish for the last 3 months, but last January's candle left a very small topwick so it might make it difficult for the February candle to continue its advance. Plus the presence of MA 50 as dynamic resistance might prevent EURNZD from increasing.

EUR/NZD Weekly Technical Analysis

EURNZD Give Signal to Drop?
Graph taken from TradingView.

On a weekly basis, EURNZD is observed to be very bullish, even having closed bullish for the last 5 weeks. Just like monthly, EURNZD may also be blocked by the 100 and 200 moving averages above it, allowing the price to make a correction. However, it should be noted that the ongoing weekly candle has managed to break the previous week's high.

EUR/NZD Daily Technical Analysis

EURNZD Give Signal to Drop?
Graph taken from TradingView.

On the daily timeframe, EURNZD has indicated a possible correction. With yesterday's daily candle closed by bearish engulfing, there is a potential for further correction of this pair. Especially if today's candle is able to exceed the lowest level from yesterday. Let's take a closer look at how EURNZD is in a lower timeframe.

Trading idea for EUR/NZD

EURNZD Give Signal to Drop?
Graph taken from TradingView.

On H4, EURNZD made a Quasimodo pattern by forming a lower low after posting a higher high. Now there is a possibility for this pair to retest to the left shoulder area and go back down even further.

Order: Sell Limit
Entry: 1.70395
Stop Loss: 1.71100
Target 1: 1.69780 (50% + BE)
Target 2: 1.69000 (25%)
Target 3: 1.68500 (25%)
Total risk: Max 1% Equity (High Risk Setup)
Reason: Bearish sentiment on daily timeframe, Quasimodo pattern and resistance on higher timeframe

ZFX Analyst’s Predictions

EURNZD which has been bullish for some time may need a short break for correction. The existence of monthly and weekly resistance as well as moving averages that act as dynamic resistance gives the possibility of a technical weakness in EURNZD in the near future.
Meanwhile, from a fundamental perspective, political tensions in Europe and the economic downturn caused by the Omicron may allow the euro to weaken in the near future.

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Risk Warning: The above content is for reference only, and does not represent ZFX’s position. ZFX does not assume any form of loss caused by any trading operations carried out in accordance with this article. Please be firm in your thinking and do the corresponding risk control.

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