Price action on our complex of euro pairs has seen the single currency move strongly higher, particularly against the Aussie and Kiwi where the surge has taken both EUR/AUD and EUR/NZD to key resistance levels on the slower time frame charts. For EUR/AUD the key level lies in the 1.5640 region, and for EUR/NZD the level it is at 1.7270, a price point the pair has now broken. Today’s close for both pairs, along with their respective volume profile is therefore important as it will determine, not only whether the single currency can continue its present bullish momentum, but whether the chronic weakness we are seeing in both Aussie and Kiwi is halted.
For EUR/AUD the 1.5640 region is one where the pair has corrected from in the past, most notably in July 2016, but any move through here could see the pair back to test the 1.6250 level recorded in July 2015. But any failure to capitalize on the current momentum would see the pair retreat and find support at 1.5170.
For eur/nzd today’s break of the key resistance at 1.7270 has taken the pair into a moderate congestion zone which may slow the present strong move higher, and contribute to a correction back to 1.7270 where moderate price support awaits.
Meantime from a fundamental perspective for the euro, today marks Angela Merkel’s ‘make or break’ coalition talks following last month’s indecisive election result. These talks are taking longer than expected as she is attempting to form a new multi party government with two parties with diametrically opposing views on key issues such as immigration and business.
Thus far markets have not reacted to the stalemate in Germany, but should the coalition talks fail and Merkel is forced into fresh elections traders and investors will most definitely start to take note.
