The EUR/NZD bias is bearish-to-range-bound, as the pair is currently below its 90-day average and in the lower half of the 3-month range.
Key drivers:
• Rate gap: The European Central Bank has maintained a neutral stance, while the Reserve Bank of New Zealand recently cut rates to stimulate growth, widening the interest rate differential against the euro.
• Risk/commodities: The oil price is currently above its 3-month average, which can support the NZD, as higher oil prices typically enhance the value of commodity-driven currencies like the NZD.
• Global trade tensions: Concerns over U.S. tariffs on New Zealand exports create uncertainty, making the NZD vulnerable to further downside pressures.
Range: The EUR/NZD is likely to drift along lower levels within its recent range, without testing extremes immediately.
What could change it:
• Upside risk: A sudden improvement in Eurozone economic data could boost the euro’s value.
• Downside risk: Further declines in global risk appetite could exacerbate weakness in the NZD.
