Short-Term Outlook for the EUR/NZD Pair

Euro/New Zealand Economic Outlook

The EUR/NZD pair declined during Monday’s trading session as the week began, with the New Zealand dollar continuing to be supported by expectations that the Reserve Bank of New Zealand will raise interest rates next month, after indicating at its last meeting that it might be necessary to tighten monetary policy to withdraw monetary stimulus and control inflation.

However, last week’s weaker-than-expected jobs report from New Zealand reinforced expectations that any further interest rate hikes would likely be gradual rather than sharp.

Nevertheless, markets continue to anticipate a quarter-point rate hike in September.

EUR/NZD from a Technical Perspective

The EUR/NZD pair rebounded during last week’s trading from the 1.9550 demand level, and we continue to expect further gains for the pair, especially after it reached the 1.9600 support level today following today’s pullback.

We expect our next target to be near the 1.9670 level, with a second target near the 1.9770 level.

This scenario would fail if the pair breaks below 1.9550; in that case, we could see the next buying levels at 1.9470/60.