Last week the RBNZ met and they kept to their hawkish path.
The board debated that they may have needed to hike by 75bps (they stuck to 50bps in the end), worried the weak NZD was an inflation risk, and expect to keep hiking rates. This strengthened the outlook for the NZD going forward.
The Eurozone by contrast is struggling with rising inflation, threats of a recession, high energy prices, and a semi war footing with the Russian and Ukraine crisis.
So, this does open up a EURNZD sell bias. Over the last 20 years the EURNZD pair has fallen a total of 16 times between October 07 and November 07. So, does this mean that the EURNZD pair will track lower from here?
Major Trade Risks:
The major risk is on any back tracking from the RBNZ over interest rate hikes. Also, note the NZD can be slow to respond to NZD monetary policy.
Don’t just trade it, Seasonax it.