EUR/NZD Outlook: Likely to decrease, as the rate currently trades below its recent average and is near recent lows amid mounting pressures.
Key drivers:
• Rate gap: The European Central Bank is unlikely to raise interest rates soon, while the Reserve Bank of New Zealand's focus on managing inflation suggests possible hikes, favoring the NZD.
• Risk/commodities: Oil prices have surged significantly, raising costs in Europe and creating potential economic challenges for the Eurozone, affecting the EUR negatively.
• One macro factor: New Zealand’s recent inflation surge may prompt the RBNZ to consider tightening monetary policy, which would support the NZD further.
Range: The EUR/NZD is expected to drift lower within its recent range, as current pressures seem to outweigh any immediate recovery prospects.
What could change it:
• Upside risk: A significant improvement in the Eurozone’s economic data could support the EUR.
• Downside risk: Continued negative impacts from geopolitical tensions in Europe could place further pressure on the EUR.
