Resistance at 1.6850 (multi-top) and break above would ease downward pressure
The bearish turnaround of the daily oscillator should cap the rallies in the coming days. A daily close below the 1.6515, early February low would underpin further bearish momentum, paving all the way for a decline to 1.6330-1.6300 its 200MA (Weekly). In the medium term, a break below the 200MA (Weekly) may trigger further losses towards 1.6200 its 50MA (monthly).
Overall, the outlook remains very bearish for the cross, which has already retraced 0.90% this week, so far.
These dips do not worry us and should enable the pair to gather momentum ahead of new rallies.
The resistances located at 1.6615, 1.6720 and 1.6850. To escape further correction, bulls must claim above 1.6850 levels.
Downshift in the euro area growth, and diminished RBNZ rate cut probability in 2019 are impacting this euro cross.
In the latest ECB policy meeting, Draghi confirmed that “The risks surrounding the euro area growth outlook have moved to the downside on account of the persistence of uncertainties related to geopolitical factors and the threat of protectionism, vulnerabilities in emerging markets and financial market volatility.”.
In contrast, RBNZ Governor Adrian Orr noted that the risks appear evenly balanced.
“For the eurozone, we expect growth to slow to a below-consensus 1.0%–1.5% in 2019 from close to 2% in 2018.” PIMCO said in a note. Also noted, “We expect one rate increase in the second half of 2019, although if the Fed pauses and the euro appreciates versus the U.S. dollar, the ECB may leave rates unchanged until 2020.”.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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