EURNZD

EURNZD is a currency pair that is based on the Euro and the New Zealand Dollar. When you trade EURNZD, you buy EUR and sell NZD in the same trade. EUR is the base currency, and NZD is the counter currency. 

In the EURNZD pair, the New Zealand Dollar is considered "weak" compared to the Euro. Exchanging NZD for EUR means you can buy more Euros than you would if the two currencies had equal exchange rates.

EURNZD Live chart: Current exchange rate

EURNZD live chart: current exchange rate

This chart shows the last year's prices for EURNZD.

Note that the exchange rate fluctuates with each trade.

Screenshot courtesy of TradingView!

How to trade EURNZD

1. Place an order with a broker.
2. The forex broker buys the base currency (EUR) at the "bid" price.
3. The forex broker sells the counter currency (NZD) at the "ask" price.

EURNZD key characteristics

• EURNZD is exceptionally volatile, much more than the most popular currency pairs. It can move 300 to 350 points in a day.
• Whereas volatility in stocks is usually a bad sign, the volatility of EURNZD gives traders the opportunity to realize higher profits.
• This should be considered a high-risk trading instrument.
• EURNZD behaves very much like EURAUD, the pair that places the Euro with the Australian Dollar. You can monitor the Australian economy to get an idea of how the New Zealand economy may do.

Why trade  EURNZD

EURNZD provides numerous opportunities to make speculative trades. The Euro is less volatile, so you can watch New Zealand conditions as the source of value fluctuations while watching the Euro to see how it responds to worldwide inflation. 

Note that the Euro is not immune to volatility, and a debt crisis has driven its value down, causing it to approach the value of NZD. This has lowered the price of EURNZD and may continue to do so. 

A EURNZD trading strategy

Timing

The timing for a currency pair depends on when the value of the base currency rises against the counter currency. So, you would want to buy EURNZD when the EUR is more valuable than NZD. In other words, each New Zealand Dollar buys you more Euros. 

You buy the pair if you expect the base currency to rise in value against the counter currency, and you would sell if you expected it to do the opposite. The price of a Forex pair is how much one unit of the base currency is worth in the quote currency. The higher the value of the base currency against the counter currency, the higher the value of the pair. 

So how can you anticipate when the value of EURNZD will go up or down? Look for reversal patterns.

Trade Reversal Patterns

Reversal patterns suggest the previous trend may go in the opposite direction soon. A downtrend may become an uptrend, or an uptrend may reverse and become a downtrend. You can spot reversal patterns in EURNZD if you learn candlestick trading. A candlestick chart that shows you trends and reversals. 

Let's look at the two types of reversals.

Bottoms

A bottom occurs at the end of a sustained downtrend. 

You can see that prices bounced up and started an uptrend.  

Tops

Uptrends always reach a peak and then reverse. 

When there are more sellers than buyers, the price goes down.

You should study the types of reversal patterns. See the candlestick trading guide to learn more.

Trade Continuation Patterns

A trend continues in the direction it is heading unless something happens to disrupt it. If you do not see a reversal pattern, you might buy EURNZD with the expectation that the upward trend may continue. 

Note that there can be surprises, so an existing trend is not guaranteed. Always watch for  events that could affect the value of EURNZD.

Selection

There are many less-volatile currency pairs. You may consider some of them in addition to the highly volatile EURNZD pair. 

• EUR/USD (euro/US dollar)
• USDJPY–US dollar/Japanese yen
• EURUSD–British pound/US dollar
• USDCNY–US dollar/Chinese renminbi
• USDCHF–US dollar/Swiss franc
• USDHKD–US dollar/Hong Kong dollar
• AUDUSD–Australian dollar/US dollar
• USDCAD–US dollar/Canadian Dollar

That does not mean you should not trade EURNZD, just be prepared for riskier trades and perhaps balance your Forex trading exposure by including more stable pairs.

Management

Forex is risky, and many people lose money. Do not try to be a superhero. Never put more than 1-2% of your trading money into one trade. 

Many Forex traders use leverage. "Leverage" means money a broker loans to you. If a leveraged trade goes badly, you could lose your original investment, because even if you lose money, you will have to repay the loan. This means you could lose more than 100%. 

It is important to use stop-loss orders. This is an order that triggers an automatic sell if EURNZD drops to a specified price or drops a specified percentage. Such an order will protect you against significant losses.

You can also use limit-buy orders. This type of order sets the highest amount you are willing to pay. Buy-limit order protects you from sudden spikes where you end up paying more for the trade than you wanted to. 

Do not make emotional trading decisions. Set a maximum loss you will accept and get out at that point.

News

The news drives currency trading. You must learn the knack for trading based on economic news without overreacting. Trade for the long term and don't let every new headline alter your strategy.

If you are not in the market when news hits, wait until things settle down. Being a little late to the party is ok.

History of EURNZD

Recession of 1992

The recession of 1992 caused the Euro to drop dramatically in value. 

Also, Black Wednesday the 1992 Sterling crisis) caused markets in 1992. The UK withdrew sterling from the European Exchange Rate Mechanism. 

The September 11 Attack in 2001

The Twin Tower attacks in New York City roiled the world economy and the Euro lost value.

The 2008 financial crisis in the EU and the worldwide financial crisis

Banks failed, and credit availability fell sharply. Stock and commodity prices went down. The Euro lost value.

Brexit

Britain's vote to leave the EU negatively affected the Euro, and debt problems are accumulating. This is keeping the Euro down.

Future predictions for EURNZD

Long-term predictions

It is reasonable to expect the worldwide economic downtrend to reverse at some point, and the Euro should increase in value faster than NZD. This means EURNZD could recover and rise. Investors have time to wait and see, as the downturn will not likely make a dramatic "v" shaped recovery. The forecast is for EURNZD to continue its downtrend for at least another year.

Medium-term predictions

EURNZD is likely to continue downward in the short term. The Euro is losing value against NZD, and the downtrend may continue until there is an uptick in the economy and debt problems are resolved.

Of course, views on where EURNZD is headed vary. However, there is a strong consensus that this pair will not be a buy for the foreseeable future. 

The difference between trading and investing in EURNZD

Decide what style of investor you are. Do nOt switch because your trades will be undisciplined. Let's look at the two major approaches:

Trading EURNZD

"Trading" usually means trying to profit from short-term ups and downs. Some stay in a position for minutes, and others remain in the trade for a week or a month.

Because EURNZD is somewhat volatile, short-term traders like it. They watch for potential peaks and valleys and buy or sell accordingly.

You must learn indicators to trade like this.

Investing in EUR and/or NZD

Holding a position for a year or so is investing." Many long-term investors may even stay in a position for five to ten years. However, they may change their strategy if a trend fails. To invest like this, watch for sustained trends. 

The most recent trend for EURNZD has been down, and this has been a sustained trend.  

5 Tips for Successful use of EURNZD

1. EUR is most likely to have a strong recovery from a world recession, so watch it to see if the exchange rate rises faster than NZD.
2. Watch commodity prices in New Zealand. NZD will rise in value as commodities rise in value. This could make EURNZD less attractive because you want a large spread between the two currencies. If NZD rises and approaches EUR value, the pair is less appealing.
3. Both currencies are in the top ten currencies traded in the world. Do not trade like NZD is an emerging currency. It is reasonable to expect it to show strength along with the Euro, Do not assume you will always have a big spread to trade.
4. NZD is a proxy for the Australian Dollar (AUD). Watch what AUD is doing to predict what NZD may do.
5. Another debt crisis is looming in the European Union, so watch for further drops in the value of the Euro.

What are the risks with EURNZD?

The most significant risk for EURNZD is the world economy. It is said that rising tides lift all boats, but the opposite is also true: a low tide lowers all boats. What this means is that it is unlikely that the Euro will make a dramatic move to the upside during the world downturn. So it is reasonable to expect EURNZD to decline for a bit. 

Note that the possible debt crisis for the European Union could drive the value of EURNZD down. 

EURNZD: General terminology

Pip - "Pip" refers to "percentage in point," sometimes called "price interest point." It is the smallest price an exchange rate can move. Example: EURNZD can make a $0.0001 move. 

Exchange Rate - The value of a currency compared to another one.

Bid/Ask Spread, or Spread - The spread is the difference between the exchange rate for EUR and NZD.

Minor Pair - The pairing of a stable currency with a less stable currency. This is considered a higher risk. There are three types of pairs: major, minor, and exotic. EURNZD is a minor pair.

Risk Management - Protecting yourself against loss of money. Short-term traders may watch their positions hourly. Longer-term investors may check positions daily and weekly. It also means placing a stop-loss order.

Stop-loss Order - This sell order triggers automatically when the price drops to a level you select. 

Limit Order - This is the highest price you agree to pay for your trade. 

Leverage - A loan from a broker. 

Margin Call - A margin call happens when you are losing and the broker asks you to make a payment on the loan he gave you. 

Gapping - This is a jump in prices without any trades in between. During volatile times, gaps do occur in EURNZD.

Leverage - This means borrowing money from a broker to invest in EURNZD.    

Conclusion

The EURNZD pair has been down in value during its current trend. However, watch for "bottoming" patterns to get in on any uptrend that may develop. Watch for news that the Euro is recovering in value, and make sure that news is supported by a long-term outlook. 

Frequently Asked Questions (FAQs)

Is EURNZD volatile?

Yes. It is considered one of the more volatile currency pairs.  

What is the nickname for EURNZD?

EUR is often called "fiber," and NZD is termed "kiwi." You could call EURNZD "fiberkiwi." 

Why is the New Zealand Dollar called "NZD"?

When currencies are called "dollars," it is helpful to show which countries' dollars you are referring to. "NZ" stands for "New Zealand." 

How much is traded in EURNZD a day?

Approximately 90.000 units. However, this can fluctuate. 

Is the New Zealand Dollar a safe currency?

It is relatively safe. It is the 10th most-traded currency in the world. 

Is the New Zealand Dollar correlated with gold?

Yes. It is correlated with the Australian Dollar, which is correlated with gold. 

Does EURNZD have a big spread when trading?

It can have. It is known for dramatic spikes and drops. However, it has been leveling out as traders avoid it during its current downtrend. When you see a decline in EURNZD value, the spread is getting smaller. The spread increases when EUR is much more valuable than NZD. 

Which is the safer currency, EUR or NZD?

EUR would be considered the most stable, which could be regarded as safer.  

Should I invest in EUR or NZD?

Investing in either of these currencies could be profitable if they rise in value, so there is no "yes" or "no" answer at any given moment. That said, the Euro is a primary world currency that will most likely recover from its lows.  

Should I trade EURNZD?

Trade this pair when the EUR rises faster than the NZD.