EURNZD recently broke below the 1.4300 major psychological support level and dipped to the 1.4100 area before pulling up. Price is now nearing the 38.2% Fibonacci retracement level on the latest swing high and low on the 4-hour chart.
If this resistance level holds, the pair could fall back to the previous lows at 1.4100 or perhaps make new ones below the 1.4000 major psychological support. Stochastic is still moving up though, which means that buyers are still in control and that a higher pullback is likely.
In this case, the 1.4300 handle could be retested and might hold as resistance on the retracement move. A rally past this point might indicate a reversal and a potential climb to the next resistance at the 1.4550 minor psychological level.
There are no major catalysts due from the euro zone today while New Zealand has its NZIER business confidence index lined up for the upcoming Asian trading session. The path of least resistance is still to the downside as the euro zone is economically weaker compared to New Zealand.
By Kate Curtis from Trader’s Way