September 9, 2021 14:15:23

While commodity currencies have had a tough time this week, NZD has held up relatively well. The country has now exited out of the nationwide lockdown which means the economy can potentially rebound swiftly on the road back to normalisation. Equally, the prospect of RBNZ tightening next month should draw attention. Expectations for inflation over the year ahead rose to their highest level since late 2011 in the latest ANZ business outlook survey. This is above the RBNZ’s target level and the bank will be keen to act on these pressures.

NZD/JPY bull flag pattern

This pair is a classic risk on / risk off barometer. Having fallen to a cycle low in August at 74.56, prices have bounced back strongly, up nine days in the last eleven towards the end of August and the beginning of this month. The move north also cut through trendline resistance and the 100-day and 200-day SMAs at 77.70 and 76.80 respectively.

We are now consolidating the strong bullish move with prices tracking sideways in a flag pattern and holding above a Fib level (61.8%) of the May-August move at 78. Bulls can put stops below this week’s low at 77.99 and aim for recent highs at 78.65 initially, but ultimately the next Fib level at 78.94.

EUR/NZD bearish consolidation

After falling from the pandemic crisis highs to a low of 1.6322 in February, EUR/NZD has been in consolidation mode more recently. The pair has traded in a range over the past five months roughly between 1.66 and 1.71. After topping out at the July 2020 low at 1.7162, prices have fallen this month to the bottom of the range and a trough of 1.6581.

Buyers have tried to rebound back into the range, but this looks like bearish consolidation depending on the close and we are making new lows today. Sellers can put stops above 1.6705 and target the year-to-date lows at 1.6322.