According to Jason Wong, Senior Markets Strategist at BNZ, the NZD/EUR pair is facing resistance ahead to make further progress after a strong run in the cross since October.
“The cross is trading below its average since 2012, following the steep fall through 2017. Has settled in a 0.56-0.61 range since late-2017. 0.56 is a strong support level, having spent very little time below that level since 2011. 0.61-0.6120 represents a key resistance level.”
“Reflecting safe-haven characteristics for the euro, NZD/EUR generally weakens in a falling risk appetite environment. Risk appetite has improved this year, stretching back up to an above-average level. A sustained period of risk aversion would be a headwind for the cross.”
“Sentiment for EUR has been subdued, not helped by the recent run of poor data, and it wouldn’t take much to see some improvement.”
“Our bias is for NZD/EUR to head lower, targeting about 0.57 through the next year. Reduced Brexit risk (spillover from GBP) would support this view.”