EUR/NZD Outlook:
The EUR/NZD is likely to decrease as it currently trades below its 90-day average and is near recent lows. This is compounded by weakness in New Zealand's trade data and domestic consumption.
Key drivers:
- Rate gap: The European Central Bank is maintaining a supportive stance on the euro as it manages inflation, while the Reserve Bank of New Zealand holds a high interest rate to combat local inflation, putting pressure on the NZD.
- Risk/commodities: Oil prices are significantly above their recent average, which can impact the New Zealand economy, as it generally relies on energy imports, thus weakening the NZD further.
- One macro factor: New Zealand's recent trade figures revealed a drop in exports, indicating potential ongoing economic difficulties that could hinder the NZD.
Range:
The EUR/NZD is expected to drift within its recent range, staying pressured below its previous average.
What could change it:
- Upside risk: A resurgence in global demand for New Zealand's dairy exports could strengthen the NZD.
- Downside risk: Continued declines in domestic economic indicators in New Zealand could lead to further depreciation of the NZD.
