For one year, the EUR/NZD pair has been moving higher with lower highs, and higher highs. Part of the reason for this has been the Euro, which has seen significant gains this year.
The daily chart below shows the near-perfect channel the pair has had this year. The support and resistance points have been easy to spot.
Part of the reason why the Euro had weakened in the previous years has been political issues. In 2015, the key topic was about Grexit while in 2016, the key topic was Brexit. This year, with reduced political activity, the Euro has managed to recover.
In the coming year, there will be no major elections in the Euro area with the top issues coming from Germany and United Kingdom. Germany’s Merkel will continue with her coalition talks while the divorce talks between the EU and the UK will continue. We may see a new election in either of the two countries. With reduced political activity in the EU, chances are that the Euro will move higher.
This year, New Zealand held its election meaning that 2018 will be a slightly political neutral year. This year, its economy continued to do well with unemployment dropping to 4.6% and average hourly wages reaching the all-time high at NZD 30.
As shown in the first chart above, the pair has been trading above the 50-day moving average since August this year. This was broken on 14th December before the pair quickly recovered.
Therefore, a combination of good economic data from the EU and those from New Zealand could make this channel continue to edge up. As shown below, the RSI is currently neutral at 49 while the ADX of 30 shows that the trend could continue.