In todays commentary, Citi analytics look on two popular majors – EUR/USD and NZD/USD. Both of them provides interesting price action and macroeconomical setups.
Italians voted “no” on a constitutional reform. Italian Prime Minister Matteo Renzi announced his resignation after conceded referendum defeat. Renzi’s resignation may not imply immediate elections, but more likely, the appointment of a super-party/technocratic PM over the coming weeks. Possible delay of capital-raising exercises and high exposure to sovereign debt may highlight the risks in bank sector.
Citi strategy: Short EUR/USD at 1.0850, with target level at 1.0600. Stop loss at 1.0950.
Technical levels: Resistance at 1.0937, Support at 1.0518
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NZD/USD
We expect minor impact of PM Key’s resignation: NZ PM Key, who has been in power since 2008, said to resign due to the family issue, not other political reasons. Despite the expectation of rate hike by Fed, yield advantage may support NZD at bottom.
Citi strategy: Long NZD/USD at 0.7200, with target level at 0.7270. Stop loss at 0.7000.
Technical levels: Resistance at 0.7295, Support at 0.6985
