EUR/NZD: Euro meets resistance at 1.7100 key level amid European elections

• The EUR/NZD finds resistance at the multi-month 1.7100 key level. 
• The ECB meeting on Thursday should be a market mover. 

The EUR/NZD is trading virtually unchanged at about 1.7050 after testing the 1.7100 multi-month resistance. 

EUR/NZD daily chart:

The main event over the weekend for the Eurozone where the political uncertainties in Italy with the eurosceptic, anti-establishment Five Star Movement and The League (Lega) who won the weekend elections with political analysts estimating that it may take weeks to form a new government as well as a potential new coalition between the Five Star Movement and the Northern League. In Germany, the SPD approved the coalition government with Angela Merkel’s CDU/CSU with 66% majority.

The key event of the week for the Eurozone is the ECB meeting scheduled to be on Thursday. Draghi and his colleagues are expected to leave the key policy measures unchanged. 

There is no major macroeconomic news coming from the Eurozone nor New-Zealand, so sentiment and technicals will likely take the upper hand. However, any news from Italy that could threaten the unity of the Eurozone could potentially affect the market.   

Earlier in the European session, the Eurozone Markit PMI composite, the Sentix investor confidence and Eurozone retail sales for January all came below expected therefore putting a pause to the recent 200-pip move made last Friday.

EUR/NZD: 4-hour chart

Technically, intraday support is seen initially at 1.6950 which is the 23.6% Fibonacci retracement level as seen on the 4-hour chart. The next intraday support is about 70 pips below at the 1.6880 level with the 50% Fibonacci retracement and the 100 and 200-period simple moving average coiled together. To the upside resistance intraday resistance is seen at 1.7100 which was the high of the day. A clear break above that key level should open the door to the 1.7200 psychological figure en route to 1.7300.