EUR/USD V EUR/NZD

From 2.1834 at the August 2008 crisis, EUR/NZD rose to 2.5815 by February 2009 and eventually dropped 7928 pips to April 2015 lows at 1.3906 in 1100 pips per year increments. What drives past and current EUR/NZD prices are revolving correlations between EUR/USD and NZD/USD. When EUR/NZD broke 1.8000’s and hit 1.5000 lows in 2012, correlations between EUR/USD and NZD/USD were on the floor so EUR/NZD transformed its correlations to USD/NZD and became a US dollar currency pair. EUR/NZD’s position in revolving correlations hasn’t changed since the 1971 free float rather loyalties changed from market period to market period. Current EUR/NZD correlations Vs EUR/USD barely reveal a pulse in monthly averages from 1 – 10 years. Only 5, 7 and 10 year averages reveal a 40% correlation. Correlations Vs NZD/USD and USD/EUR factor deeply negative at minus 0.66. USD/NZD correlations run 0.69 and minus 0.99 in NZD/EUR.

Correlations to EUR/NZD means a direct benefit in any economic recovery as EUR/NZD will travel far higher from current 1.6600. Solid supports exist at 1.6533, 1.6403 and 1.6316. A break of 1.6316 changes current longs to shorts. Next vital points above are found from 1.6673 – 1.6681 then on to 1.6800’s beginning at 1.6840. If EUR/NZD is viewed from EUR/USD then tops exist from 1.6673 – 1.6681 and out of bounds at the 3 and 5 year averages. Today’s EUR/NZD viewed by itself by daily ranges is also out of bounds. Price should trade between 1.6586 – 1.6223. The daily range is 181 pips above or below current prices.
What is expected in EUR/NZD over time is a slow slow grind higher due because the Yellen raise and Draghi cut converged interest rates between the Fed and ECB. Fed funds closed at 0.36 in the last 6 days and 12 in the last 14. The channel between Fed Funds and European interest rates runs at current 0.40 and widened 9 basis points from 31 since last reported days ago.For EUR/USD and NZD/USD to head lower and EUR/NZD higher, the channel must widen far deeper than current levels. Solid US economic news, promises of further rate hikes or disaster news from Europe would move the channel. EUR/MZD is a buy dip currency pair long into the future.

EUR/USD V EUR/NZD from EUR/USD 1.0921, means and ranges

1 Year mean 1.5812, range above 1.6840, below 1.4784
2 Year mean 1.5911, range above 1.6679, below 1.5143
3 Year Mean 1.5878, range above 1.6556, below 1.5200
5 Year mean 1.5570, range above 1.6354, below 1.4786
7 Year mean 1.5410, range above 1.7390, below 1.3430
10 Year mean 1.6068, range above 1.8170, below 1.3966

EUR/USD V EUR/NZD from EUR/USD 1.0975, means and ranges

1 Year mean 1.5899, range above 1.6927, below 1.4871
2 Year mean 1.5913, range above 1.6681, below 1.5145
3 Year mean 1.5883, range above 1.6561, below 1.5205
5 Year mean 1.5590, range above 1.6374, below 1.4806
7 Year mean 1.5457, range above 1.7437, below 1.3477
10 Year mean 1.6113, range above 1.8215, below 1.4011

EUR/USD V EUR/NZD from EUR/USD 1.0820, means and ranges

1 Year mean 1.5651, range above 1.6679, below 1.4623
2 Year mean 1.5908, range above 1.6676, below 1.5140
3 Year mean 1.5867, range above 1.6545, below 1.5189
5 Year mean 1.5533, range above 1.6317, below 1.4749
7 Year mean 1.5320, range above 1.7300, below 1.3340
10 Year mean 1.5982, range above 1.8084, below 1.3880

EUR/USD V EUR/NZD from EUR/USD 1.0715, means and ranges

1 Year mean 1.5490, range above 1.6518, below 1.4462
2 Year mean 1.5905, range above 1.6673, below 1.5137
3 Year mean 1.5857, range above 1.6535, below 1.5179
5 Year mean 1.5495, range above 1.6279, below 1.4711
7 Year mean 1.5229, range above 1.7209, below 1.3249
10 Year mean 1.5896, range above 1.7998, below 1.3794

Brian Twomey, Inside the Currency Market, btwomey.com

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