EURNZD is the ticker symbol for the euro to New Zealand dollar exchange rate in the forex market. Both the euro and the New Zealand dollar are considered major currencies, but the EURNZD is considered a minor pair because it does not constitute the US dollar (the world’s most traded currency). Minor currency pairs are typically less liquid and more volatile than major pairs. This means that they are generally traded with relatively wider spreads than major currency pairs. The EURNZD also has carry trade properties. The euro is a low-yielding, stable currency, whereas the New Zealand dollar is a high-yielding, growth currency.
In the EUR to NZD Forex rate, EUR is the base currency, whereas NZD is the quote currency. This simply means that at any given time, the price of the EURNZD pair represents the amount of New Zealand dollars it would take to exchange for one unit of the euro (1 EUR to NZD).
History of EURNZD
The euro is the official currency of the Eurozone, a monetary union that consists of 19 of the 27 states of the European Union. A common currency was one of the provisions included in the 1992 Maastricht Treaty that laid the foundation of the European Union. The euro was consequently introduced in 1999 and has now grown to become one of the most important global currencies. It is the second most used (both in reserve and circulation), as well as the second most traded currency in the world, as of August 2022, trailing only the US dollar.
The Eurozone consists of modern, advanced, and highly developed mixed economies. Some of the biggest economies within the Eurozone include Germany, France, Italy, Spain, and the Netherlands. As a common currency, the euro has been largely hailed as a success. It has helped foster peace as well as promote trade, investment, and tourism within the Eurozone. Its critics have, however, suggested that it has helped create an imbalanced economic bloc with nations having no independent control over monetary policy decisions. There have also been suggestions that the ECB has, in its monetary policy stance, prioritized low inflation over the overall economic growth of EU members.
On the other hand, the New Zealand dollar is the official currency of New Zealand, the Cook Islands, Niue, Tokelau, and the Pitcairn Islands. It was introduced in 1967 as a decimalized currency to replace the New Zealand pound that used the complex Sterling system. The NZD was initially pegged to the USD, but since the collapse of the Bretton Woods System, it has freely floated in the market. Now the 10th most traded currency in the forex markets, the NZD is also one of the most important commodity dollars. Commodity dollars tend to have their values influenced by price changes of major commodities in the international markets. New Zealand’s economy is underpinned by agricultural products, and the country counts Australia and China as some of its major trading partners. Forex investors sometimes trade the NZD to gain exposure to Southeast Asian economies. This means that Chinese economic growth or slowdown can reflect on the strength or weakness of the NZD.
EURNZD Historical Price Performance
The EURNZD pair traded around 2.16 in the early 2000s. The pair dipped to lows of below 1.68 by late 2005, but then turned higher and by early 2009, it traded above 2.53. After that peak, the EURNZD entered a sharp downtrend that saw it settle below 1.43 by early 2015. There was a gradual recovery and by early 2020, the EURNZD revisited highs of around 1.85. During and after the COVID-19-inspired Great Lockdown, the EURNZD has largely trended lower, and as of August 2022, it trades around 1.58.
Major Bodies Influencing EURNZD – EUR To NZD Trading
The European Central Bank (ECB)
The ECB is the central banking system of the Eurozone. It has the mandate of maintaining price stability. The ECB releases interest rates every month and accompanies them with its monetary policy statement. ECB events have a massive influence on the euro, and the bank has, in recent years, been very active in the markets. Higher rates tend to prop up the value of the euro, whereas lower rates tend to weaken the value of the common currency.
Reserve Bank of New Zealand (RBNZ)
The RBNZ is the central banking system of New Zealand. The bank has the mandate of ensuring a sound and dynamic monetary environment and financial system that will support the prosperity of the people of New Zealand. RBNZ releases Monetary Policy Decisions seven times a year as well as Monetary Policy Statements four times a year. The bank also publishes Financial Stability Reports twice a year. RBNZ events often have a big impact on the NZD value.
Statistics New Zealand
As New Zealand’s national statistics agency, Statistics New Zealand is tasked with producing and publishing important statistics about the country. The agency’s key indicators watched by NZD traders include the Unemployment Rate, Consumer Price index, GDP, as well as Imports & Exports data.
When it comes to EUR/NZD technical analysis, investors track asset correlations to diversify their risks as well as to unlock unique opportunities in the market. The EUR/NZD pair tends to have a positive correlation with the EURAUD, EURGBP, EURNOK, EURCAD, and EURSGD. The pair also tends to be negatively correlated with the USDTRY, GBPTRY, XPDUSD, NOKSEK, and USDZAR.