Get the Best EUR/NZD Forex Rates & Analysis

Instrument description

In the Forex market, the transactions and daily trading volume are dominated by the ‘major currencies’ that includes U.S, Euro. Great British Pound, Japanese Yen, Swiss Francs, Australian Dollars, Canadian Dollar, and New Zealand Dollar. The currencies are always traded in pairs and categorized into ‘Major currency pairs,’ ‘Commodity currency pairs,’ and ‘Cross pairs.’

The exchange rate of the Euro against the New Zealand Dollar is shown by EUR/NZD, where EUR is the base currency, and NZD is the quote or counter currency. Although both EUR and NZD are included in the list of major currencies, their pairing is called a ‘cross pair’ and a combination that does not include USD either in the base or quote currency.

Some of the other popular cross pairs that are traded daily in the Forex market and quite significant are EUR/GBP, EUR/JPY, and EUR/CHF. The EUR/NZD indicates the economic and trading relationship between the European Union member states (E.U.) and New Zealand.

The EUR/NZD pair indicates how many New Zealand Dollars will be needed to buy one Euro. For example, the current exchange rate of EUR/NZD is 1.75; it means 1 EUR equals 1.75 NZD; in other words, you would need to pay 1.75 NZD to buy 1 Euro. The currencies such as NZD and AUD are considered as a proxy for the growth of China and have performed relatively well against the Euro in recent years.

History of EUR/NZD Currency Pair

The EUR/NZD pair forms a distant relationship as EUR constitutes a bigger economy as it is comprised of 27 member countries, while New Zealand is a quite small and independent country in South East Asia. The EUR/NZD pair is often viewed as a pair that signifies the Eurozone economy against the southeastern economy.

Euro is the certified currency of the Eurozone, which consists of 17 states of the European Union (E.U.), which makes for the Eurozone. The Euro is the currency that is traded the most after the U.S Dollar and also included as a reserve currency along with U.S Dollar, British Pound, Japanese Yen, and Swiss Franc. The trade industry in Eurozone increased by more than 5% after the implementation of the Euro. Germany, UK, and France represent three of the most stable economies and have wide trade agreements with all the developed and emerging countries of the world.

New Zealand, although a small economy, but its currency is commodity based due to its rich agricultural goods and natural resources and New Zealand forms a close trading partnership with China and Australia, which also happens to be its neighboring country. The New Zealand Dollar is regarded as a high yielding currency and has benefited from the economic crisis that happens in the Eurozone. Apart from exports, New Zealand is a popular tourist destination, and each year millions of travelers visit the country, so tourism also plays a major part in boosting the economy of New Zealand.

The New Zealand Dollar is popularly known as Kiwi as it symbolizes the national bird of the country and replaces the New Zealand Pound in 1967. Over the past two decades, New Zealand has emerged as a developing market economy with a wide range of export goods such as dairy products, wood, seafood, and machinery.

How to Trade EUR/NZD Pair

As a trader, among other options you can trade the EUR/NZD pair using Contracts for Difference (CFDs), which gives the comfort of speculating on the price change of the underlying asset without the need to own the currencies. With CFDs, you can use leverage, which means by depositing a small amount in your trading account, you can open a fairly larger position and increase the chance of maximizing your profits but also equal losses. You can implement a risk management strategy such as stop loss to try and minimize financial losses.

Trading EUR/NZD pair through CFDs also gives you the luxury to trade in both directions, which is either going long or short. If you believe that the Euro would gain momentum in the coming days as compared to New Zealand Dollar, then you would go long or Buy Euro, and conversely, if you think that the Euro would weaken in front of New Zealand Dollar, then you would go short or sell the Euro.

How to read the Price Change in EUR/NZD Pair

The EUR/NZD pair is considered to quite a volatile pairing as the daily price movements can reach 300 to 350 points, which are even more than the volatility of some of the other popular currency pairs. The high volatility provides a significant opportunity for short term traders to speculate the price movements and try to profit if the market goes to their direction.

The ticker for the Euro exchange with New Zealand Dollar is denoted by EUR/NZD. If we examine the price chart of the EUR/NZD pair, we note a relatively high value of 1.9029 on March 18, 2020. However, there has been a downward trend since mid-March, and the market reached a low of 1.7201 on June 8, 2020, currently, the EUR/NZD pair trades on 1.7344. The Bid price or willingness of traders to buy EUR is 1.7439, while the Asked price or traders willing to sell EUR IS 1.7435. The future forecast is a Bullish trend for Euro during a Bearish trend for the New Zealand Dollar.

What causes price change in the EUR/NZD pair?

The exchange rate and direction of the market of EUR/NZD pair is influenced by economic factors, financial news, and policies of the Eurozone and New Zealand. The monthly financial reports and policies of E.U. and New Zealand are quite different, as E.U. represent 27 countries while New Zealand is a single country. The difference in decisions from the governing bodies such as the European Central Bank (ECB) and Reserve Bank of New Zealand (RBNZ) makes fundamental analysis and forecasting for the EUR/NZD pair quite challenging.

The main macroeconomic factors that influence the EUR/NZD pair are included in the economic data such as interest rates, inflation, Gross Domestic Product (GDP), and consumer price index. The trade balance and budget deficits of the 17 Eurozone countries also play a vital role in determining the exchange rate of the EUR/NZD pair. As a trader, you need to examine the daily price movements carefully and anticipate all the latest economic news concerning E.U. and New Zealand. The EUR/NZD pair offers considerable opportunity due to high-value differentials, but the trader should consider to try to manage his risk effectively to prevent financial losses.

The information above is for education purposes only and cannot be considered as investment advice. Past performance is not reliable indicator of future results.