EUR/NZD: Euro bulls prudent at the 1.6930 level amid dovish ECB

• ECB’s Draghi: “Euro strength could weigh on inflation down the line”.
• New Zealand GDP scheduled at 21.45 GMT.

The EUR/NZD is currently trading at around 1.6854 down approx 70 pips on Wednesday so far. 

Earlier in the European session, Mario Draghi spoke at the ECB conference hosted by the Institute for Monetary and Finacial Stability in Frankfurt. He said that he is more confident than in the past that inflation is on the right track, however risks and uncertainties still remain as the ECB still need to see further evidence that inflation dynamics are moving in the right direction. On the asset purchase program (APP) he said that the stimulus is still necessary for now. Draghi stressed that the key question is to know how quickly stronger demand will translate into rising prices. A dovish comment that currency traders certainly picked up was: “Euro strength could weigh on inflation down the line”. The ECB president concluded by saying: “Monetary policy will remain patient, persistent, and prudent”. EUR/NZD traders are also prudent as they sold the Euro while the pair was approaching the 1.6930 resistance on the back of Draghi’s comments. 

Later on Wednesday at 21.45 GMT, the New-Zealand GDP is expected at 0.7% q/q and 3.1% for the annual rate versus 2.7% previously. Any sign of growth will favor the NZD as the New Zealand economy has been lagging behind most developed countries of late.

EUR/NZD daily chart

Technically, those last four months the EUR/NZD has been predominantly rangebound. The pair is trading below its 100-period SMA and above an ascending trendline. Support is seen at 1.6800 psychological level, followed by 1.6700 cyclical low and 1.6500 which is the 4-month low. Resistance is seen at the 100-period SMA a little above 1.6900, followed by 1.7100 which has been the top of the range those last months. A push above 1.6900 would probably see a test of the 1.7100 level, while a push below 1.6800 would probably see a test of the 1.6500 in the coming weeks.