EUR/NZD Outlook:
The EUR/NZD rate is currently below its 90-day average and near recent lows, making a slight downward movement likely. The ongoing mixed economic signals from both the Eurozone and New Zealand create uncertainty.
Key drivers:
• Rate gap: The European Central Bank is maintaining an accommodative stance while the Reserve Bank of New Zealand is expected to hold rates steady, which generally favors the NZD.
• Risk/commodities: Oil prices are significantly above their recent average, which can add inflationary pressures in the Eurozone, impacting the EUR negatively.
• One macro factor: Employment data from New Zealand shows a slight rise in unemployment, pointing to a softening labor market, which may limit the NZD's strength.
Range:
EUR/NZD is likely to drift within its recent range as uncertainty weighs on both currencies.
What could change it:
• Upside risk: A stronger-than-expected economic recovery in the Eurozone could boost the EUR.
• Downside risk: If the Reserve Bank of New Zealand adopts a more dovish tone, it could weaken the NZD significantly.
