EURNZD recently broke below the neckline of its head and shoulders reversal pattern to signal that a decline is underway. Price found support at the 1.6700 major psychological level and has since pulled up for a retest.

The area of interest or former support turned resistance was able to keep gains in check, so the Fib extension tool on this move shows the next downside targets. Price seems to have bounced off the 38.2% level around the 1.6800 mark but could still head further south.

The 61.8% level lines up with the swing low and might also be a take-profit level. Stronger selling pressure could drag it down to the 78.6% extension at the 1.6650 minor psychological mark or the full extension at 1.6570.

The 100 SMA is below the longer-term 200 SMA to indicate that the path of least resistance is to the downside. In other words, the selloff is more likely to carry on than to reverse. Then again, the gap between the moving averages is narrowing to signal weakening selling momentum and a potential bullish crossover.

RSI is turning lower to signal that bearish momentum is present. This oscillator has some ground to cover before hitting the oversold region, which means that bears could stay on top of the game for a bit longer. Stochastic is starting to pull up from the oversold region to indicate that buyers are starting to return.

The euro is under a bit of downside pressure on account of Brexit-related uncertainties. After all, the outcome could affect the euro zone economy as a whole and it doesn’t help that the latest batch of reports haven’t been so upbeat.

Meanwhile, the Kiwi could stand to benefit from expectations of stimulus from China. This could drive up demand for commodities and also lift risk appetite, both of which would benefit the higher-yielding currency.