EUR/NZD Outlook:
The EUR/NZD rate is currently below its recent average and near recent lows. As a result, the outlook is likely to decrease, primarily driven by the recent data from the Eurozone which is weighing on the euro.
Key drivers:
• Rate gap: The European Central Bank is expected to maintain an accommodative monetary policy, while the Reserve Bank of New Zealand continues to hold interest rates to combat domestic inflation.
• Risk/commodities: Oil prices are experiencing significant volatility and are currently above their average, which usually supports the NZD due to New Zealand's dependence on exports.
• One macro factor: Recent consumer confidence figures from Eurozone data point towards a sluggish economic outlook which pressures the euro.
Range:
EUR/NZD is likely to drift within its recent 3-month range without testing extremes.
What could change it:
• Upside risk: A sharp improvement in Eurozone PMI data could provide support to the EUR.
• Downside risk: Continued trade deficits in New Zealand could further pressure the NZD and exacerbate the EUR/NZD decline.
