- EUR/NZD braces for second weekly upside, reverses the previous day’s losses.
- ECB matched wide market forecasts of inaction, upwardly revised economic projections.
- Antipodeans benefited from US dollar weakness, hopes of economic recovery.
- G7 will be the key as EU-UK jostles over Brexit and rumors of anti-China moves getting hot.
EUR/NZD picks up bids around 1.6930, up 0.10% intraday, while reversing the previous day’s losses amid early Friday. The cross-currency pair marked the heaviest losses in a week the previous day after the duo of the key catalysts, namely the European Central Bank (ECB) meeting and the US Consumer Price Index (CPI), backed Antipodeans.
Although the ECB refrained from any policy moves, as expected, its upward revision to the GDP and Inflation forecasts for 2021 and 2022 suggests the policymakers accept reflation fears despite rejecting tapering. That said, the ECB signaled the GDP to grow by 4.6% this year (up from 4.0%) and 4.7% in 2022 whereas inflation may rise to 1.9% for 2021 and 1.5% for 2022.
On the other hand, the US CPI marked the fastest jump since 2008 to 5.0% YoY while the Core CPI rallied to the highest in 30 years with a 3.8% figure.
It should, however, be noted that the US 10-year Treasury yields refreshed a three-month low following the data/event release while also dragging the US dollar index (DXY). This, in turn, backed the commodities and Antipodeans.
Also favoring the New Zealand dollar (NZD) could be the news of the US-China trade and investment peace, for now, as well as chatters surrounding further covid vaccine donation by the UK and the US.
Recently, US bipartisan Senators agreed over a $1.7 trillion infrastructure spending plan and flashed positive signals for the markets.
However, traders are cautious ahead of the key Group of Seven (G7) meeting as the EU-UK will jostle over the Brexit issue under the leadership of US President Joe Biden. Additionally, rumors over the UK and the US-backed push for detailed investigation of covid origin and policies to punish China over labor issues could entertain the EUR/NZD trades.
Technical analysis
Although a three-week-old triangle restricts EUR/NZD moves between 1.6885 and 1.6995, 21-day SMA’s extra support to the 1.6885 figure keeps buyers hopeful.
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