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From Central Banks to Structure, Dissecting the Logic Behind the Rebound
Summary:
During the European session on Friday, EURNZD stabilized around the 1.9700 level, maintaining a rebound structure. The ECB kept interest rates unchanged, with its overall policy stance remaining neutral to stable. Meanwhile, New Zealand’s unemployment rate unexpectedly rose, reinforcing expectations for rate cuts by the Reserve Bank of New Zealand (RBNZ) later this year and weighing on NZD. Against the backdrop of fundamental divergence and technical structure repair, the medium-term bullish framework in EURNZD remains intact.
Buy
PENDINGEURNZD
EXP
1.95850
Entry Price
2.02750
TP
1.92100
SL
1.96923 +0.00549 +0.28%
--
Point
PENDING
1.92100
SL
CLOSING
1.95850
Entry Price
2.02750
TP
Fundamentals
The ECB announced on Thursday that it would keep the deposit rate unchanged at 2.00%, fully in line with market expectations. The policy statement reiterated the ECB’s confidence in stabilizing inflation at the 2% target over the medium term and continued to emphasize a data-dependent, meeting-by-meeting policy approach.
At the press conference, ECB President Lagarde stated that inflation risks are “broadly balanced.” She noted that while certain uncertainties have increased, some risks have also eased. As a result, the Governing Council is satisfied with the current policy stance and did not signal any near-term adjustment.
Regarding the inflation outlook, upside risks include rising energy prices, further fragmentation of global supply chains, and increased fiscal spending on defense and infrastructure. Downside risks stem from tariff-driven weakness in external demand, the transmission of global excess capacity, tighter financial conditions, and the dampening effect of EUR appreciation.
On exchange rates, Lagarde noted that “a stronger euro could dampen inflation,” while emphasizing that the appreciation in EURUSD since March 2025 has already been incorporated into the ECB’s baseline projections. The ECB will continue to monitor the transmission of exchange rate movements to inflation.
In New Zealand, Statistics New Zealand data released on Wednesday showed that the unemployment rate rose to 5.4% in Q4 2025, the highest level since 2015 and above the market expectation of 5.3%.
The data intensified concerns over slowing economic momentum in New Zealand and significantly altered the path of monetary policy expectations. Interest rate swap markets now broadly price a more than 60% probability of an RBNZ rate cut at the May meeting, while expectations for further rate hikes have been pushed back to beyond 2026.
Under the dual pressure of shifting policy expectations and weakening economic data, NZD’s recent relative strength against EUR has clearly faded.
Technical Analysis
From a structural perspective, EURNZD broke below a key neckline on December 9 last year, confirming a head-and-shoulders top formation. Prices subsequently traded below the medium-term trendline for an extended period, maintaining an overall weak bias until a rebound emerged on February 3.
Notably, the pair broke above the previous high at 1.9790 on Thursday, indicating that the decline triggered by the head-and-shoulders pattern has ended on a short-term basis. The key focus now is whether the pullback can stabilize without forming a new low. If the pullback is successfully confirmed, EURNZD may enter a phase of medium-term rebound continuation.
Overall, amid persistent fundamental divergence and gradual repair of the technical structure, EURNZD remains biased toward trading the rebound.
Trade Recommendations
Trade Direction: Buy
Entry Price: 1.9585
Target Price: 2.0275
Stop Loss: 1.9210
Valid Until: March 6, 2026 23:55:00
Support: 1.9606 / 1.9501 / 1.9410
Resistance: 1.9792 / 1.9860 / 1.9982
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