This Week: EURNZD jumps towards 50-period SMA

EURNZD has wiped out all of its year-to-date gains last week, with the Kiwi Dollar having strengthened against all of its G10 peers so far this month.

The Bloomberg FX forecast model projects a 74.8% chance that EURNZD will trade between 1.7362 and 1.7736 this week.

Amongst G10 currencies, markets also predict that the Kiwi would be the most volatile against the euro this week, though positioning appears slightly bullish in the euro’s favour.

The Reserve Bank of New Zealand’s (RBNZ) rate decision and the inflation data out of Europe will be in focus.

Events Watchlist:
 

• Wednesday, February 28th: Reserve Bank of New Zealand (RBNZ) rate decision

The RBNZ is expected to maintain its Official Cash Rate at 5.5%. Markets only expect the RBNZ to lower this rate in November. 

EURNZD may rebound towards its 21-day simple moving average if RBNZ Governor Adrian Orr shares concerns about lacklustre growth and subdued inflation which leads to sooner-than-expected rate cuts.
 

• Thursday, February 29th: Germany February consumer price index (CPI)

Inflation in the Eurozone’s largest economy is forecasted to drop to 2.6% year-on-year, though the month-on-month figure is slated to tick higher to 0.5%.

Lower-than-expected inflation which prompts the European Central Bank (ECB) to lower rates sooner than June 2024 may send EURNZD to its lowest since May 2023 below 1.7400.
 

• Friday, March 1st: Eurozone February consumer price index (CPI)

While traders may frontload their reactions on EUR pairs based on Germany’s CPI figures from the day prior (Thursday), the Eurozone’s headline inflation number still bears watching. It’s forecasted to come in at 2.5%, while core CPI is set to print at 2.9%.

Higher-than-expected CPI may help return EURNZD to year-to-date gains.

Here’s a comprehensive list of other key economic data and events due this week:

Monday, February 26

• JPY: Japan January PPI
   
• US30: Amazon replaces Walgreens on Dow Jones Industrial Average index (before US markets open)
   

Tuesday, February 27

• JPY: Japan January national CPI
   
• USD: US February manufacturing index, consumer confidence
   

Wednesday, February 28

• NZD: RBNZ rate decision
   
• EUR: Eurozone February economic and consumer confidence
   
• USD: US 4Q GDP (second); speeches by Atlanta Fed President Raphael Bostic, Boston Fed President Susan Collins, New York Fed President John Williams
   

Thursday, February 29

• JPY: Japan January retail sales, industrial production
   
• AUD: Australia January retail sales
   
• EUR: Germany February CPI and unemployment
   
• USD: US January PCE Deflators, personal income and spending; US weekly initial
  jobless claims
   
• USD: Speeches by Chicago Fed President Austan Goolsbee, Atlanta Fed President Raphael Bostic, Cleveland Fed president Loretta Mester
   
• CAD: Canada December GDP
   

Friday, March 1

• JPY: Japan January jobless rate; February manufacturing PMI (final)
   
• CNH: China February PMIs
   
• EUR: Eurozone February CPI; January unemployment
   
• USD: US February ISM manufacturing and consumer sentiment (final)
   
• USD: Speeches by Atlanta Fed President Raphael Bostic, San Francisco Fed Mary Daly
   
• US500: US government shutdown deadline