Recently, the exchange rate for the euro to New Zealand dollar (EUR/NZD) has shown a robust trend, currently trading at 1.9604, which is 1.6% above its three-month average of 1.9293. Analysts note that this reflects a stable range of fluctuations between 1.8878 and 1.9664, indicating a generally favorable position for the euro against the kiwi.
The euro's performance is shaped by a mix of economic factors, including strong Q2 earnings from the financial sector in Europe and ongoing geopolitical developments, particularly relating to Ukraine. The July inflation data from Germany is unlikely to cause significant movement unless it diverges sharply from expectations. Furthermore, the euro is benefiting from a weaker U.S. dollar, with predictions suggesting it could rise to $1.17 against the USD by October and even $1.20 within a year, influenced by concerns surrounding U.S. fiscal policies. This scenario may provide a boost to the EUR/NZD rate if the dollar continues to decline.
On the other hand, the New Zealand dollar has faced challenges due to a decline in labor market strength, with rising unemployment and expectations of a potential interest rate cut from the Reserve Bank of New Zealand. Additionally, recent trade tariffs imposed by the U.S. could adversely affect New Zealand's export-driven economy. Market sentiment around the U.S. Federal Reserve's policy could also play a significant role, as anticipated rate cuts may affect the global risk appetite and thus impact the NZD.
The ongoing volatility in the oil market, with prices near 60-day lows, may create further pressure on the NZD as well, potentially making commodity-driven currencies more vulnerable. This trend could allow the euro to maintain its strength against the kiwi if global economic uncertainty continues.
Overall, the future trajectory of the EUR/NZD exchange rate will be heavily dependent on developments in both the Eurozone and New Zealand’s economic outlook, alongside broader market sentiment influenced by geopolitical events and central bank policies. Investors should stay alert to any changes in these factors, as they can lead to notable shifts in the currency pair.
