An eventful day for the EURNZD currency pair saw both economies release their latest inflation reports, giving traders further cues into the respective monetary paths of the central banks. While the New Zealand dollar received an initial boost from a slower-than-expected moderation, the Euro stole the show, as core inflation in the Eurozone remains sticky. 

In New Zealand, year-over-year inflation moderated from 6.7% to 6%, remaining above the 5.9% consensus. From a quarterly perspective, inflation fell from 1.2% to 1.1%, again missing the 1% consensus, triggering a short-term hawkish repricing regarding the next RBNZ meeting. In the Eurozone, year-over-year inflation slowed in line with expectations, from 6.1% to 5.5%, but core inflation painted a concerning picture, rising more than expected from 5.3% to 5.5%.  

Technical 

On the 1D chart, an ascending channel has formed, with the upward momentum approaching resistance at 1.8071. A breakout above this resistance could leave the channel vulnerable to additional upside, where resistance at 1.8171 could become a pivotal level in the price trend. A break above could confirm the momentum, bringing higher resistance at 1.8224 into play in the longer term. 

However, if the momentum stalls at the 1.8071 resistance level, a pullback is on the cards for a continuation of the channel trend, where support is established at 1.778 (S1). A breakdown at the lower support level of 1.7660 could open the door for a channel breakdown in the longer term, with immediate support below the channel at 1.7450 and 1.7297. 

Summary 

While both economies reported inflation statistics that tilted in a hawkish favour, the EURNZD currency pair is currently under bullish control. Momentum could bring the currency pair toward resistance at 1.8071, where the directional trend as we advance could be decided. 

Sources: Koyfin, Tradingview, Reuters