- In the last week, the EUR gained 400 pips after the ECB’s Lagarde failed to delay a 2022 rate hike.
- The central bank’s monetary policy divergence favors the NZD against the EUR.
- EUR/NZD Technical Outlook: Neutral, but a daily close below 1.7094 could see the pair drop towards 1.6940.
The EUR/NZD extends its losses to three consecutive days, after some speeches from the ECB calmed the markets, as STIR futures have priced in 50 basis points of ECB rate hikes by the end of 2022. At the time of writing, the EUR cross /NZD is trading at 1.7088.
Last Thursday, the European Central Bank (ECB) decided to keep its monetary policy unchanged. However, during the press conference, ECB President Christine Lagarde did not oppose raising interest rates in 2022, as she did in previous monetary policy meetings.
The divergence between the RBNZ and the ECB strengthened the NZD
Market players perceived this as an aggressive turn by the ECB, which sent EUR/USD higher, breaking 1.1300 and 1.1400 on its way to 1.1480. Regarding EUR/NZD, the pair rose from 1.6960 to 1.7357 regardless of the Reserve Bank of New Zealand (RBNZ), which has already started tightening conditions with 50bps of rate hikes in 2021.
Therefore, due to the tightening of monetary policy conditions by the RBNZ with its overnight cash rate (OCR) at 0.75% from today, while the ECB’s deposit rate at 0% favors prospects for a lower EUR/NZD pair.
EUR/NZD Price Forecast: Technical Outlook
In the overnight session for North American traders, the EUR/NZD was rejected by the 100-hour Simple Moving Average (SMA) at 1.7199, which sent the pair down for the rest of the day, breaking the 1.7100 figure on its way down. .
That said, the first support for the EUR/NZD would be the daily high from Feb 3, resistance now support at 1.7094. Break below the latter would expose Feb 3 daily low at 1.6974, followed by Feb 1 at 1.6940.
Additional technical levels
Source: Fx Street
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