Trade Of The Week: EURNZD to keep above key support?

February 26, 2024

By ForexTime 

  • EURNZD rebounds from key support
  • RBNZ decision + EU data in focus
  • Trend bearish on D1 but bulls present
  • Key level of interest at 50-day SMA
  • Bloomberg model: 75% chance range 1.7384 – 1.7768

After practically erasing its 2024 gains last week, the EURNZD kicked off Monday with renewed bullish force!

Bulls returned to the scene, pushing prices back above 1.7550 ahead of a potentially volatile week for the minor currency pair.

Note: A minor currency pair does not include the USD but includes at least one of the world’s majors. 

Looking at the past few weeks, the EURNZD has been on a rollercoaster ride thanks to technical and fundamental forces. Although prices have been edging lower on the weekly charts, key support can be found at 1.7420.

To put things into context, the last time the EURNZD secured a weekly close below this level was back in early January 2023.


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On the monthly charts, there is a similar picture with prices waiting for a fresh fundamental spark to trigger the next big move.

With all the above said, here are 3 reasons why this could be a wild week for the EURNZD:

  1. RBNZ rate decision

The Reserve Bank of New Zealand is widely expected to keep its key rates unchanged at 5.50% at its February 28th meeting.

Economic growth unexpectedly contracted in Q3 while there have been consistent signs of cooling price pressures. However, traders are still pricing in a 54% probability of one more rate hike by May 2024 with the first rate cut expected by November. Much attention will be directed towards the monetary policy statement which may provide fresh insight into the central bank’s thinking for 2024.

  • Should the RBNZ strike a hawkish note and signal one more hike could still be on the cards, this may strengthen the New Zealand Dollar. 
  • Any hint of doves or signs that the next move could be a cut has the potential to weaken the NZD, pushing the EURNZD higher as a result.
  1. Key EU data

It is a week packed with top-tier data from Europe, but the standouts are the Germany and Eurozone February inflation reports. 

These incoming inflation reports could influence expectations about when the European Central Bank (ECB) will start cutting interest rates in 2024. Traders are currently pricing in a 30% probability of a rate cut by April with a move by the ECB fully priced in by June 2024. 

Given how the inflation data and other data from Europe may influence these bets, it could be reflected in the EURNZD.

  • If overall data from Europe, including sticky inflation numbers, support the argument around the ECB keeping rates higher for longer – this could boost the euro.
  • Signs of cooling price pressures and soft data may fuel speculation around lower rates in Europe, dragging the euro lower. 
  1. Technical forces

The EURNZD remains in a noisy range on the daily charts with support at 1.7420 and resistance around 1.7700. Although the trend since mid-January points south, bulls are lingering in the vicinity.

  • A strong breakout and daily close above the 50-day SMA at 1.7600 may encourage an incline towards 1.7700 and the 100-day SMA at 1.7760. 
  • Should the 50-day SMA prove to be reliable resistance, this may trigger a decline back towards 1.7420 and 1.7384.

According to Bloomberg’s FX forecast model, there’s a 75% chance that EURNZD will trade within the 1.7384 – 1.7768 over the next week.


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