EUR/AUD, EUR/CAD, EUR/NZD Charges Outlook

Euro Outlook:

• April could also be one of many higher months of the yr for EUR/USD, however different main currencies fare effectively towards the dollar too. Dissecting particular person EUR-crosses is important.
• Taking a longer-term view means that EUR/AUD, EUR/CAD, and EUR/NZD might merely be biding their time earlier than persevering with their year-long downtrends.
• In line with the IG Consumer Sentiment Index, EUR-crosses have a combined bias within the near-term.

Euro versus Commodity Currencies is a Blended Image

The Euro has been underperforming the remainder of the majors via the primary three-plus months of 2021, but it surely has the great fortune of operating right into a robust seasonal tailwind that has been producing among the best buying and selling months of the yr for the only foreign money versus the dollar. However it’s not simply the Euro that has been faring effectively versus the US Greenback: it’s usually month for the commodity currencies as effectively.

As such, it’s essential to dissect particular person EUR-crosses relatively than taking a presumptive broad brush stroke. Whereas some stability has been present in EUR/AUD (symmetrical triangle) and EUR/NZD (damaged downtrend, holding multiyear assist), EUR/CAD is already in strategy of falling in direction of long-term trendline assist. Certainly, taking a longer-term view means that the trio of Euro/commodity foreign money crosses might merely be biding their time earlier than persevering with their year-long downtrends.

EUR/AUD RATE TECHNICAL ANALYSIS: DAILY CHART (December 2016 to April 2021) (CHART 1)

The decline skilled by EUR/AUD charges has slowed in latest weeks, though vital technical harm stays. Having already misplaced the parallel rising channel as measured from the August 2015 and March 2020 highs towards the April 2017 low, EUR/AUD has consolidated right into a short-term symmetrical triangle proper on the ascending trendline from the August 2012 and April 2017 lows. In context of the previous development, decision is sought to the draw back. A drop under the June 2017 at 1.5227 would mark new lows for 2021 as effectively a significant psychological breakdown (given its earlier efforts as assist in early-2018).

EUR/CAD RATE TECHNICAL ANALYSIS: DAILY CHART (January 2008 to April 2021) (CHART 2)

Taking a step again to the weekly timeframe for EUR/CAD charges, it’s evident that bearish momentum stays firmly in place. The pair stays under its weekly 4-, 8-, and 13-EMA envelope, which is in bearish sequential order. Weekly MACD continues to drop whereas in bearish territory, and weekly Sluggish Stochastics are holding in oversold territory.

However EUR/CAD has not but reached ascending trendline assist from the August 2012 and February 2020 lows, which comes nearer to 1.4650/700 this month. That’s to not say that EUR/CAD charges are attributable to breakdown farther from there; the pair has been consolidating in a multidecade symmetrical triangle relationship again to the December 2008 and March 2020 highs, which in actuality might be drawn even additional again to the implied EUR/CAD fee on the March 1995 excessive.

EUR/NZD RATE TECHNICAL ANALYSIS: DAILY CHART (October 2018 to April 2021) (CHART 3)

EUR/NZD charges have maybe the ‘most bullish’ setup among the many three EUR-crosses listed right here, however that doesn’t imply all is sanguine. In reality, regardless of breaking the downtrend from the March and September 2020 highs, EUR/NZD has not been in a position to clear the 23.6% Fibonacci retracement of its 2020 excessive/2021 low vary at 1.7184. That’s to say that the latest rally is unconvincing and could also be roughly a ‘useless cat bounce.’ A return again to the yearly low at 1.6332 shouldn’t be out of the query; the world between 1.6235/330 has been assist for a number of years, and a break via mentioned space would represent a cloth technical change in tempo.

— Written by Christopher Vecchio, CFA, Senior Foreign money Strategist