The EUR / NZD to watch in forex this week

Currency pair of the week »EUR / NZD

With the Reserve Bank of New Zealand and the European Central Bank meeting this week, the UR / NZD pair has the potential to be volatile in forex.

The European Central Bank (ECB) meets on Thursday to discuss monetary interest rate policy. In its latest meeting, the ECB anticipated the end of its QE program to the third quarter from the fourth quarter.

It will now buy € 40 billion of bonds in April, € 30 billion of bonds in May and € 20 billion of bonds in June. Inflation has been a major issue in Europe in recent months, with the March reading coming in at 7.5% y / y versus an expectation of 6.6% y / y and a reading of 5.8% in February.

Minutes released last week reflected rising inflation, although “many members felt that the current high level of inflation and its persistence required further immediate steps towards normalization of monetary policies.”

However, when they spoke out, European Central Bank members remained on the dovish side, worried about the effects of the Russo-Ukrainian war on economic growth.

The statement and press conference will be followed closely for any hints that the ECB will look to raise interest rates by the end of the year.

The Reserve Bank of New Zealand (RBNZ) is also meeting this week for its interest rate policy meeting. The Reserve Bank of New Zealand raised rates three times in a row, bringing the OCR rate to 1%. Additionally, the RBNZ noted that it will begin withdrawing from its Large Scale Asset Purchase Program (LSAP).

The central bank is expected to raise rates by at least 25 basis points to 1.25%, but the markets are considering a 60% chance that it could increase by 50 basis points! L’inflation in the fourth quarter of 2021 it stood at 5.9% on an annual basis!

In February, food inflation rose to 6.8% yoy and is expected to reach 7.7% yoy in March. In the latest meeting, the committee said it expects OCR to reach 2.2% by the end of this year and 2.57% in 2023. Look at the statement to see if expectations are revised even further. high.

The EUR / NZD has fallen sharply in forex since it hit a short-term high on February 4th at 1.7359. The price bottomed out on March 7 with a hammer candle, which is a reversal formation of candles. The price of the EUR / NZD thus rebounded to the 38.2% Fibonacci retracement level of this period and held the resistance level.

The price then began to fall again, making lower lows and highs along the way, thus forming a descending triangle. On April 5th, the EUR / NZD pair broke out below the lows of March 7th and is currently trading near the upper and descending trend line of the descending triangle.

EUR / NZD daily chart

Source: Tradingview, Stone X

On the 4-hour chart, the EUR / NZD price has rebounded from the most recent low to the 50% Fibonacci retracement from the highs of March 15 to the low of April 5 near 1.5970, which is just below the trend line. descendant of the triangle.

Further resistance is at the 61.8% Fibonacci retracement from the same time frame. Horizontal resistance is above 1.6148, then the March 15 high of 1.6340. Horizontal support is at the low of April 5th near 1.5600, then 2017 lows at 1.5457 and 1.5237!

EUR / NZD 4-hour chart

forex euro / nzd 11042022
Source: Tradingview, Stone X

With the RBNZ and ECB meeting this week, the EUR / NZD has the potential to be volatile in forex. Look at the releases of the two statements regarding future interest rate hikes, especially from the ECB.

Hints of rate hikes from the ECB this year could drive the EUR / NZD up much higher, while their absence could drive the pair down!

By Joe Perry, CMT, FOREX.com »Official site

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Disclaimer: The information and opinions contained in this report are provided for general information purposes only and do not constitute an offer or solicitation to buy or sell any forex or CFD exchange contracts. Although the information contained herein has been obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, and assumes no responsibility for any direct, indirect or consequential damages that may arise from the fact that someone relies on such information.

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