EURNZD recently busted through a long-term descending trend line to signal that a reversal from the downtrend is underway. Price is now trading inside a short-term ascending channel and is testing support.

A bounce off this area could take price up to the channel top around 1.7000, but it would need to clear the 200 SMA dynamic inflection point just below the mid-channel area of interest.

On the subject of moving averages, the 100 SMA is still below the 200 SMA to suggest that the path of least resistance is to the downside or that the selloff is more likely to gain traction than to reverse. Then again, the gap between the indicators is narrowing to signal weakening bearish momentum and a potential bullish crossover.

RSI is heading higher to signal that buyers are in control and could keep pushing EURNZD higher. Stochastic is also moving north so price could follow suit while bullish pressure is in play. However, stochastic is already nearing the overbought region to signal potential exhaustion among buyers.

The ZEW economic sentiment index is due from the euro zone today and improvements are eyed for Germany and the entire region. In that case, the shared currency could enjoy more upside versus the Kiwi.

There are no major reports lined up from New Zealand for today, with the quarterly CPI reading due a couple of days from now. Slower price pressures are eyed, with the reading slated to fall from 0.7% to 0.4% for Q4 2019, keeping traders on the lookout for RBNZ easing.

Later in the week, the ECB will announce its actual policy decision but no major changes are eyed. Instead the focus will be on the strategic review and possible adjustments to price stability targets. A dovish tone from policymakers could still undo the short-term climb of this pair while optimism could support gains.