EUR/NZD Outlook: Slightly weaker, but likely to move sideways as the rate is below its recent average and experiencing limited driving factors.
Key drivers:
• Rate gap: The European Central Bank's neutral stance contrasts with the Reserve Bank of New Zealand's recent rate cuts, which pressures the NZD.
• Risk/commodities: The rising oil prices are benefiting the euro amid an unstable global environment, but recent volatility may limit gains for the NZD.
• One macro factor: New Zealand's private sector continues to contract, raising concerns over economic health and weighing on the NZD outlook.
Range: The EUR/NZD exchange rate is likely to hover within its stable 3-month range as both currencies face pressures but remain resilient.
What could change it:
• Upside risk: Improvement in Eurozone economic indicators, especially in Germany, could boost the euro's performance.
• Downside risk: Heightened trade tensions or further weakening of New Zealand's economic outlook could lead to losses for the NZD.