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ECB does little to help the Euro vs commodity currencies EURAUD EURNZD AUDNZD

December 10, 2020 3:37 PM

ECB does little to help the Euro vs commodity currencies: EUR/AUD, EUR/NZD, AUD/NZD

The ECB left rates unchanged at minus 50bps, increased the Pandemic Emergency Purchase Emergency Program (PEPP) by 500 billion Euros and extended the program ending date from June 2021 to March 2022.  This outcome was in line with most economist expectations, and after taking profits off the table the last few trading sessions, the EUR/USD is higher by nearly 60 pips today.  However, the same can not be said for the Euro vs some of the commodity currencies.

EUR/AUD

Since June 1st, EUR/AUD has been trading in a sideways channel between 1.6033 and 1.6573.  The only time it was outside that channel over the last 5 months was in late October, when the pair posted a false breakout above the channel and pulled back inside.  Today, the pair is making a run at the bottom of the channel.  Notice the long upper wicks on the daily timeframe over the last week, which should have given an indication EUR/AUD could turn lower.

Source: Tradingview, City Index

On a 120-minute timeframe, EUR/AUD has been in a downward sloping channel over the last two days from 1.6450 down to 1.6092.  The RSI is in oversold territory and is diverging with price, which is approaching support of the longer-term sideways channel and the bottom of the shorter-term downward sloping channel.  Bulls will be looking for dips to buy below 1.6100, with an initial target of the upper trendline of the downward sloping channel near 1.6170.  Major support is below at the convergence of the 2 trendlines near 1.6050.  Be careful of a liquidity gap below there if price manages to push lower.

Source: Tradingview, City Index

EUR/NZD

Much of the same can be said for the can be said for EUR/NZD as it moves lower today.  The pair has been in a sideways channel since May 20th between 1.7162 and 1.8009.  The only time it was outside that channel over the last 5 months also was in late August, when the pair posted a false breakout above the channel and pulled back inside.  In mid-November, the pair posted a false breakdown below the channel and moved back inside, however today EUR/NZD has broken below the channel.  Notice the long upper wicks on the daily timeframe over the last week, which should have given an indication that the pair could turn lower.

Source: Tradingview, City Index

On a 120-minute timeframe, EUR/NZD has been moving lower over the last week from 1.7281 down to 1.7094.  The RSI is diverging with price; however, it is not in oversold territory.  The RSI can still move lower.  There is horizontal support near the December 9th  lows of 1.7094.  Euro bulls will be looking to buy here and target the downward sloping trendline near 1.7200.  Additional horizontal support is below at 1.7050 and 1.6958.  Be careful of a liquidity gap below there  if price manages to push lower.

   Source: Tradingview, City Index

AUD/NZD

TradeRs may be wondering why EUR/AUD seems to be holding up better than EUR/NZD.  To see why, traders just need to look at AUD/NZD.  The pair has been moving lower since mid-August and is has formed a descending wedge.  Price posted a false breakdown below the wedge on December 1st, and today has broken out the top of the wedge (the direction one would expect a breakout to occur from a descending wedge).  The target for the breakout of a descending wedge is a 100% retracement, which is near 1.0895.  Therefore, if this trend continues moving higher, one could expect EUR/AUD to outperform EUR/NZD over the next few weeks.

 Source: Tradingview, City Index


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