It has been a stellar couple of months for EURNZD, with the pair rising over 2,000 pips since around mid-April. A resurgence of the euro and a collapse in the kiwi has propelled the pair above 1.6000 and into a resistance zone around 1.6150-6200. Yet, the euro dropped lower at the open after it became clear that Greece’s creditors had rejected a proposal put forward by Athens, making it unlikely that a deal to secure further emergency funding for Greece will be reached during this week’s meeting of eurozone finance ministers.
However, we are concerned about the ability of kiwi to rally, given the recent decision by the RBNZ to cut interest rates and open the door for further policy loosening. This made the NZ dollar the only currency in the G10 FX basket to lose ground against the US dollar last week - every other currency in the basket managed to push out 1% gains against the dollar. NZDUSD is now trading below 0.7000 and still looking somewhat weak.
Nonetheless, there are a lot of events this week that could move EURNZD.
• ECB President Draghi speaks (1300GMT tonight)
• German ZEW economic sentiment (0900GMT Tuesday)
• Eurozone CPI (0900GMT Wednesday)
• NZ Q1 GDP (2245GMT Wednesday)
• ECB Targeted LTRO (0915GMT Thursday)
• Eurogroup meetings; Eurozone Finance Ministers meetings
From a technical perspective, EURNZD looks like it may stabilise in the near-term below 1.6200 as it’s looking somewhat overbought. On the downside we’re keeping an eye on 1.6000 and then 1.5965. If the pair can push above 1.6100 it may make another attempt to reach 1.6200, although it will have to push through resistance around 1.6150 – recent high.