EUR/NZD Outlook: Bearish, as the rate is below its 90-day average and near recent lows, influenced by a weaker euro.
Key drivers:
• Rate gap: The European Central Bank maintains a neutral stance while the Reserve Bank of New Zealand has recently cut interest rates to stimulate growth, widening the gap between the two currencies.
• Risk/commodities: Although oil prices are at recent highs, their impact on the euro is muted, causing less upward pressure on EUR.
• Macro factor: New Zealand's private sector continues to contract, raising concerns about its economic health and overall stability.
Range: EUR/NZD is likely to hold near current lows within its recent range as signals remain mixed.
What could change it:
• Upside risk: A surprise improvement in European economic data could bolster the euro.
• Downside risk: Further indications of weakness in New Zealand's economy may deepen the bearish outlook for the kiwi, impacting the pair.