FxWirePro: EUR/NZD rises sharply on New Zealand economic slump

• EUR/NZD rose sharply on Thursday as softer-than-expected New Zealand GDP data dragged the Kiwi dollar down against euro

• New Zealand’s economy contracted more than forecast in Q2, dragged by a slump in construction and global uncertainty, boosting bets on a sharper October rate cut. 

• New Zealand’s economy shrank 0.9% in Q2, official figures revealed, missing expectations of a 0.3% fall projected by analysts and the central bank.

• Markets now expect 58 bps of OCR cuts, up from 48 bps before the GDP release, and are pricing a 20% chance of a 50 bps cut in October.

• Technicals are favoring bullish sentiment as RSI is at 65 and the pair is trading above   11,14 & 21-DMAs. 

• Immediate resistance is located at 2.0068 (23.8% fib), any close above will push the pair towards 2.0127(Higher BB).

• Strong support is seen at 1.9829 (SMA 20) and break below could take the pair towards 1.9734(38.2% fib).

Recommendation: Good to buy on dips around 2.0000 with stop loss of 1.9920 and target price of 2.0120