Short-Term Decline Toward the “Double Bottom” Area Possible, Buy-on-Dips Bias Remains Intact

Summary:

EURNZD is currently trading around 1.9725, with short-term price action still appearing relatively weak. The pair may continue to decline and retest the previous double-bottom support region. However, from a medium-term structural perspective, the broader uptrend remains intact. Once the key support zone undergoes a secondary confirmation, the pair may resume its upward trajectory, with a buy-on-dips strategy remaining preferable.

BUY EURNZD

EXP

PENDING

1.96500

Entry Price

2.00000

1.94800

1.98647 -0.00386 -0.19%

Pips

PENDING

1.94800

Exit Price

1.96500

Entry Price

2.00000

Fundamentals

Recently, the Reserve Bank of New Zealand’s latest inflation expectation survey significantly reinforced market expectations that interest rates may stay higher for longer. Data showed one-year inflation expectations surging from 2.59% to 3.41%, while two-year expectations also rose to 2.53%, both above the RBNZ’s medium-term inflation target midpoint.

This suggests that despite signs of slowing economic growth in New Zealand, inflation remains sticky. Markets have therefore begun repricing the possibility that the RBNZ may either raise rates further or at least maintain restrictive policy settings for an extended period. This has provided short-term support for the New Zealand dollar and contributed to the recent pullback in EURNZD.

On the other hand, the European Central Bank also maintains a hawkish stance. ECB Governing Council member Kazaks stated that if rising oil prices continue feeding into inflation expectations, the ECB may need to increase borrowing costs further. Markets currently expect the ECB to deliver a 25-basis-point rate hike at its June meeting.

Overall, the current environment can be described as a “hawkish versus hawkish” dynamic between the euro and the New Zealand dollar. However, the sudden rise in New Zealand inflation expectations has had a stronger short-term impact on market sentiment, giving the NZD a temporary advantage.

That said, from a medium- to long-term perspective, continued ECB tightening should still provide underlying support for the euro, while the NZD remains more vulnerable to swings in global risk sentiment and commodity cycles. Therefore, the broader EURNZD structure should not be viewed as overly bearish.

Short-Term Decline Toward the “Double Bottom” Area Possible, Buy-on-Dips Bias Remains Intact_1

Technical Analysis

From the daily chart structure, EURNZD entered a corrective phase after forming a temporary top at higher levels. Prices are currently trading near 1.9725, with momentum remaining biased toward consolidation and mild weakness.

However, it is important to note that the pair has not yet decisively broken below the previous key double-bottom support zone. Therefore, the current structure still appears more consistent with a technical pullback within a broader uptrend rather than a complete trend reversal.

The key downside focus remains on the prior double-bottom support zone around 1.9500 and 1.9580. If prices revisit this area and show signs of stabilization, the pair may form a classic “double-bottom confirmation followed by renewed upside” structure. This zone not only corresponds to previous major lows but also aligns closely with the medium-term ascending trendline support.

As long as prices remain above the double-bottom structure, the medium- to long-term bullish trend remains valid. On the upside, if the pullback confirmation completes successfully, EURNZD could retest the previous highs around the 2.0000 region.

From a technical indicator standpoint, MACD remains in a bearish momentum release phase, while RSI is also trading in slightly weak territory below neutral, indicating that the pair may still require additional downside probing in the short term. Therefore, it may be more appropriate to wait for prices to approach key support before looking for long opportunities.

Trade Recommendation

Trade Direction: Buy

Entry Price: 1.9650

Target Price: 2.0000

Stop Loss: 1.9480

Valid Until: 2026-06-13 23:55

Support Levels: 1.9667, 1.9621, 1.9580

Resistance Levels: 1.9798, 1.9859, 1.9940

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