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Euro and Pound Begin Rebound versus Australian and New Zealand Dollars

Euro and Pound Begin Rebound versus Australian and New Zealand Dollars

2013-12-16 10:30:00
Christopher Vecchio, CFA, Senior Strategist
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Talking Points:

- Euro-Zone PMI surveys (DEC) mixed; Manufacturing gains, Services eases, Composite improves overall.

- Expecting relatively constrained price action the first few days of the week with FOMC on Wednesday.

- Only light amount of data on European and North American economic calendars today.

To keep up with the European data and news as the week goes forward, be sure to sign up for my distribution list.

Intraday Price Perspective

Euro_and_Pound_Begin_Rebound_versus_Australian_and_New_Zealand_Dollars_body_Picture_1.png, Euro and Pound Begin Rebound versus Australian and New Zealand Dollars

A scan of this morning’s best and worst performers via the Strong/Weak app shows that the Canadian Dollar, a recent underperformer, is posting a solid rebound across the board on the day. However, over the past rolling four-hour period, we note that the major Tokyo session currencies – the Australian and New Zealand Dollars as well as the Japanese Yen – have started to decline in tandem.

Accordingly, on the lower timeframes (m15, H1, and H4), the British Pound and the Euro have becomes the top performers by a fair margin. Having recently previously examined long EURAUD and long GBPJPY, we now turn our attention to long GBPNZD. First, a look at the daily chart:

TECHNICAL ANALYSIS – CHART OF THE DAY

GBPNZD Daily Chart: December 2010 to Present

Euro_and_Pound_Begin_Rebound_versus_Australian_and_New_Zealand_Dollars_body_x0000_i1028.png, Euro and Pound Begin Rebound versus Australian and New Zealand Dollars

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- There are implications for a GBPNZD bottom developing going into 2014. The pair has traded above the descending trendline off of the 2011 and 2012 highs for the past several weeks, consolidating in a range between N$1.8860 and 2.0060.

- An Inverse Head & Shoulders pattern may be forming as well, and given the Head near 1.7700 and the Neckline near 2.0060, a move towards 2.2300/2500 would be expected over the next 18-months.

Now, a look at the H4 timeframe:

GBPNZD H4 Chart: November 1 to Present

Euro_and_Pound_Begin_Rebound_versus_Australian_and_New_Zealand_Dollars_body_x0000_i1029.png, Euro and Pound Begin Rebound versus Australian and New Zealand Dollars

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- Going back to May 30, the GBPNZD has traded in a range between 1.8860 and 2.0060 (with a brief break higher for three days from November 28 to December 1).

- The Symmetrical Triangle (black lines) that led to a break higher in mid-November has given way to another Symmetrical Triangle since November 29 (red lines).

- RSI (21) on the H4 timeframe broke out of its downtrend and has consolidated alongside price.

- A move in price into the 1.9925/2.0060 zone, confirmed by RSI (21) climbing above 55, would suggest a break higher could be coming.

- First target on a break higher is 2.0285. Bullish bias invalidated at 1.9500.

Here’s the other data influencing and that will influence European FX price action today:

EURO-ZONE ECONOMIC CALENDAR

Euro_and_Pound_Begin_Rebound_versus_Australian_and_New_Zealand_Dollars_body_x0000_i1030.png, Euro and Pound Begin Rebound versus Australian and New Zealand Dollars

View the archive of today’s EUR Euro-Zone PMI surveys (DEC) webinar here.

UK ECONOMIC CALENDAR

There are no data on the British Pound economic calendar for Monday, December 16, 2013.

SWISS ECONOMIC CALENDAR

There are no data on the Swiss Franc economic calendar for Monday, December 16, 2013.

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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