EUR/NZD trading plan to buy back at 1.5425 - Westpac

Analysts at Westpac offered a EUR/NZD trading plan.

Key Quotes:

"Entry: Sell 50% at 1.5720, Sell 50% at 1.5775, Stop: 1.5870, Target: 1.5425

Rationale:

Fundamentals for NZD remain strong. We see the currency as around 5% undervalued, not fully reflecting strong NZ commodities. Despite an expected drop in WMP prices, the overall GDT auction on Tuesday’s was firm
The RBNZ looks to remain on hold, and the recently announced budget was supportive
The NZ calendar in the week ahead is unlikely to ruffle market.
We remain of the view that the ECB is unlikely to surprise on the hawkish side at their policy meeting this week. ECB’s Draghi and Praet have said that any change will be gradual and cautious, though Bundesbank President Weidmann and others have stressed the need to withdraw accommodation. This implies that current market expectations for a significant change in stance at the upcoming June meeting may be misplaced
CFTC positioning now indicates that leveraged funds have trimmed EUR shorts, and now hold a small net long for the first time since May 2014."