EUR/NZD Retreats later than December Peak
EUR/NZD briefly reached 2.4000 today, marking its highest level since late November, before pulling back sharply. The recent volatility is underpinned by a mix of fundamental factors.
The euro (EUR) has been supported by:
→ A stronger-than-expected rise in euro area industrial production (+0.8%), which eased concerns about a potential recession;
→ Expectations that the European Central Bank will adopt a cautious stance at its meeting on Thursday, 18 December, given stabilising economic data.
Conversely, the New Zealand dollar (NZD) has come under pressure due to:
→ The Half Year Economic and Fiscal Update from the New Zealand Treasury on 9 December, which painted a subdued outlook, forecasting a sluggishdown in recovery and unemployment rising to 5.5%;
→ Falling dairy prices, a key export, which are fragileening the currency’s resilience.
Despite today’s highs, the EUR/NZD chart indicates that further gains may be limited.
Technical Overview of EUR/NZD
Between 29 November and 12 December, the pair dropped roughly 2.9% (A→B), before rebounding to today’s peak (2), which sits near the midpoint of the prior extremes. Viewed through a Fibonacci lens, this aligns with a typical 50% retracement, suggesting the earlier downtrend could resume.
From a trend channel perspective, the descending channel has expanded upwards, but today’s price action—an initial rise followed by a fall—resembles a Bearish Engulfing pattern near the channel’s upper boundary. Indicators are likely to show divergence between the highs marked as 1 and 2.
Taking these factors together, traders should consider a scenario where the seven-day upward trend (shown in blue) is capped by bears, and EUR/NZD continues to move within the descending channel.
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