Sell EURAUD Idea for the medium-term
It's hard to see the Eurozone fall into a recession. Currently, New Zealand seems like it will be able to avoid the same recessionary risks as a result of a global economic slowdown.
The pair has broken below a strong level of support turned resistance. The pair has bounced above this level since 2017. It's easy to see the pair move lower
HEADWINDS TO THIS PLAY
New Zealand retail sales disappointed this week showing that the country's economy may be slowing down.
The country also has more exposure to China, which is struggling to buoy the economy as consumer spending and sentiment keeps falling. If China's economy continues to struggle despite current easing, I expect NZD to be weak.
TAILWINDS TO THIS PLAY
The Eurozone data for August showed PPIs, PMIs and sentiment from both businesses and consumers disappointed to the downside. This has pushed the EURUSD back to parity after a bounce.
The Euro is back to parity and volumes show that traders are not as bearish as they were back in April. However, short positions for non-commercial traders have increased by 70K+ since end May.
Eurozone recessionary worries as a result of high energy prices in the region are placing the Euro as a precarious position. I expect another leg down in the Euro to 0.93-0.95 region.
The pair has broken below a strong level of support turned resistance. The pair has bounced above this level since 2017. It's easy to see the pair move lower
HEADWINDS TO THIS PLAY
New Zealand retail sales disappointed this week showing that the country's economy may be slowing down.
The country also has more exposure to China, which is struggling to buoy the economy as consumer spending and sentiment keeps falling. If China's economy continues to struggle despite current easing, I expect NZD to be weak.
TAILWINDS TO THIS PLAY
The Eurozone data for August showed PPIs, PMIs and sentiment from both businesses and consumers disappointed to the downside. This has pushed the EURUSD back to parity after a bounce.
The Euro is back to parity and volumes show that traders are not as bearish as they were back in April. However, short positions for non-commercial traders have increased by 70K+ since end May.
Eurozone recessionary worries as a result of high energy prices in the region are placing the Euro as a precarious position. I expect another leg down in the Euro to 0.93-0.95 region.
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