EUR Crosses

We are fully aware that EUR is one of the currencies that market participants have loved to hate since the EZ crisis of 2010 -2011. This is perhaps one of the reasons that we have seen so many bearish predictions (with sub parity assumptions for EURUSD being my favourite). For those of you watching us daily on the FACE webinar (if you have not done so yet I strongly advise that you do, its 100% FREE, register here ) you already know that since the ECB meeting on May we warned that things are changing for the EUR simply because the ECB is clearly demonstrating a shift towards a less accommodative monetary policy. Having said that the 2 EUR crosses we are going to examine today are EURAUD and EURNZD both of which seem to be reversing after producing decent corrections to their previous (impulsive) moves higher.

EURAUD specifically enjoyed a strong rally that started in February this year and peaked on the 1st day of June. After correcting lower to the 38.2% Fib within a descending wedge it finally broke higher exactly a week ago. Yesterday’s outside white candle confirms. A re-test of 1.48 will likely provide a great buying opportunity for a move towards fresh highs.

EURNZD peaked more than 10 days before EURAUD did (notice those divergences, they often provide great trading opportunities) and corrected lower within a steep descending channel. A re-test of the 200DMA just above the 61.8% Fib yesterday produced a spectacular reaction, a daily key reversal. A re-test of 1.5450 will be considered by the writer an amazing opportunity for a move towards 1.58.

GBP Crosses

Despite having suffered greatly from the pre Brexit event risk and the post Brexit uncertainty, cable has mounted a recovery that started in January against (almost) everybody’s expectations. The pound’s performance has surprised most market participants and we have been monitoring GBPAUD’s break higher after it almost created a L/T double bottom on the daily chart followed by an impulsive move higher that peaked in early May. The corrective move lower almost reached the 61.8% Fib before forming an inverted H&S formation (more clearly seen on the 4h chart). This is very likely the beginning of a new leg higher that should take us at least to 1.7150 (as a 1st target).

GBPNZD peaked almost at the same time the GBPAUD did after first falsely breaking above a triangle intraday. The move lower was more or less well behaved while the descending wedge that formed during the past few days gave us the 1st signals that the correction was getting exhausted. Yesterday’s key reversal is signaling that a reversal higher is now a very high possibility. 1.81 is our 1st target higher.

P.S. For full disclosure I am long both EURAUD (since last week) and GBPNZD since yesterday.

Steve Voulgaridis