Bias: The NZD/EUR is currently bullish-to-range-bound, positioned slightly above the 90-day average and at the upper half of its past three months' trading range.
Key drivers:
• Rate gap: The Reserve Bank of New Zealand is easing policy with recent rate cuts, while the European Central Bank is expected to maintain stable rates, creating a favorable environment for the NZD against the EUR.
• Risk/commodities: The NZD benefits from steady increases in oil prices, which have risen above average, supporting New Zealand's commodity exports.
• Macro factor: Economic growth in the Eurozone is projected to remain moderate, with a focus on inflation control, which could dampen demand for the EUR.
Range: The NZD/EUR is expected to drift within the recent three-month range, influenced by external risk factors and economic developments.
What could change it:
• Upside risk: Improving global trade conditions could strengthen the NZD further against the EUR.
• Downside risk: Persistent economic concerns in the Eurozone could weaken the EUR, but any renewed aggression in global risk appetite may pressure the NZD downwards.