- The EUR/NZD pair surged after the RBNZ unexpectedly kept its Official Bank Rate unchanged at 2.75%. Next is tomorrow's ECB decision.
Current Setup
The EUR/NZD is up 1.48% for the day as of writing, with the last reported level coming at 1.9871. Today’s verified quotes indicate the pair’s trading range is between 1.9576 and 1.9916. This 340-pip move reflects the market reaction to the Reserve Bank of New Zealand’s unexpected rate hold. Markets expected a 25 bps hike to 3.00%, but the RBNZ disappointed them by unexpectedly keeping its official cash rate at 2.75%. The dovish hold caused the New Zealand dollar to weaken sharply against peers, allowing EUR/NZD to stage a remarkable upside push.
The price move sets the tone for Thursday’s rate decision by the European Central Bank. The ECB is expected to keep interest rates unchanged, with the core focus of the rate statement and the ECB Chair’s press conference expected to dwell on the geopolitically-induced inflationary risks to the Eurozone and growth expectations.
EUR/NZD — Key Market Drivers
1. RBNZ’s Unexpected Rate Hold
With a narrow 4-3 vote, the RBNZ left its official cash rate at 2.75%, producing a market shock that saw a sharp weakening of the Kiwi Dollar. This immediately triggered EUR/NZD’s surge. However, the apex bank guided that it could tighten further if inflation pressures persist. If markets interpret this as a December rate hike and start pricing it in, the Kiwi Dollar could stage a recovery, with EUR/NZD shedding some gains via profit-taking.
2. ECB Decision
The next ECB policy decision is on Thursday, 29 October. This is the next major catalyst for the pair. The markets expect no change in the Main Refinance Rate, which stands at 2.65%. If the ECB sends a hawkish message on persistent inflation or offers a positive growth outlook for the Eurozone, this could sustain the current upside move in EUR/NZD in the near term. However, any hints of caution from the ECB could catalyze some unwinding of the current EUR/NZD longs.
3. Eurozone Growth and Inflation Outlook
On the Eurozone growth and inflation outlook, Friday’s euro-area German inflation data and GDP print will add to whatever the ECB signals in its rate statement on Thursday. Persistent inflation or stronger economic activity will support the Euro, as it favors further ECB tightening in the near future. However, weak GDP numbers and easing inflation could cap the Euro’s gains.
4. Global Risk Sentiment
The Fed decision due later Wednesday could impact global bond yields and risk appetite. The Kiwi Dollar is a risk-associated currency, same as the Euro (but to a lesser degree). Changes in risk sentiment from the Fed’s decision could cause material changes in EUR/NZD’s value.
EUR/NZD Forecast Scenarios
Bull case: Look for a sustained move above 2.0124 as NZD weakness continues. A hawkish ECB strengthens this case.
Base case: The pair could sustain the current consolidation if the ECB delivers a less-than-hawkish outlook. This would cap the pair’s current advance and keep it within the identified range.
Bear case: If the market starts pricing in a December RBNZ rate hike, coupled with weak guidance from the ECB, this scenario becomes more probable. This would see the 1.9529 support breakdown, unveiling targets at 1.9341 and below.
Technical Outlook
EUR/NZD is the preferred currency pair to trade because the NZD is already weak after the RBNZ left interest rates unchanged at 2.75%, despite markets expecting a 25 bps hike to 3.00%.
The pair is trading within the range bordered by 1.9529 and 2.0124. A bullish response to the ECB decision will drive an uptick that challenges the range’s upper boundary. A break above 2.0124 unlocks access to 2.0646, the high of 19 November 2025. The 16 October 2025/31 December 2025 highs at 2.0407 could be a potential pitstop on this upside move.
On the flip side, a breakdown of the 1.9529 support could unlock a downside move toward the 14 May 2025/10 June 2025 double bottom at 1.8862. However, several potential pitstops exist, with pivots at 1.9341 (29 July 2025 low) and 1.9042 (17 June 2025 low) serving as speed bumps on the downside move.