Mentioned in AUD the negative 40% correlation V EUR/USD. NZD is negative 70% V EUR/USD. Correlations are the main points dragging AUD and NZD higher but its also the constraints on EUR/USD downsides. This correlation dilemma is also forcing AUD and NZD into far overbought territory. For EUR, the more price remains in tight ranges, the greater the pop will be to the downside. EUR has no choice, it must lead this dilemma. To understand currency markets is to understand the self containment of a currency price. No need to ever ever look outside a currency price to find direction, targets, or whatever else all look for outside the currency market cause the answer won’t be found.
EUR/USD V NZD/USD. EUR/USD prices should be between 1.0938 – 1.0876, the big point remains 1.0907. NZD/USD is correct between 0.6682 – 0.6594 with big vital point 0.6638. Further Vital NZD points are found at 0.6628 and 0.6645. I don’t see any movement in OCR when RBNZ meets. The RBNZ signals long in advance when an OCR change is here. Nothing signals a change. Yet to lower OCR is no big deal because OCR is in a terrific spot in relation to its 20 year averages. A 1/4 point up or down in OCR does little for the longer term since OCR is so perfectly positioned. The story for AUD and OCR is the same as NZD OCR.
For AUD/USD and NZD/USD, best to continue to sell rallies because both are so so overbought.
NZD/USD. Bottoms. 0.6767, 0.6750. Ranges, 0.6745, 0.6725 and 0.6705. Above 0.6823 and 0.6843. Targets at 0.6806 and 0.6786 were achieved today. We will see a slow drift downwards until American markets open. Same for AUD/USD. Overall NZD sell point at 0.6628 and long at 0.6670 will work perfectly.
NZD/CAD Big points from current price 0.9083 are located at 0.9146 and 0.9025. If EUR/USD isn’t constraining enough on NZD then NZD/CAD adds to the dilemma.
Brian Twomey, Inside the Currency Market, btwomey.com