EUR/NZD Forex Trading

The EUR/NZD minor forex pair demonstrates the value of the Euro against the New Zealand dollar. The pair is known in forex trading circles as the ‘Euro Kiwi’. Australia and the European Union (EU) are New Zealand’s primary trading partners, which explains why the EUR/NZD has become one of the most liquid currency pairs in forex markets. Within this article, you’ll get to understand the dynamics of the EUR/NZD pair and what factors influence the price of the NZD against the Euro.

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Skilling

4.6
Demo account Yes
Minimum deposit -
Minimum deposit: £100
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider
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Avatrade

4.5
Demo account Yes
Minimum deposit 100€
Minimum Deposit: £100
Between 74-89% of retail investor accounts lose money when trading CFDs with this provider.
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eToro

4.2
Demo account Yes
Minimum deposit $200
Minimum Deposit: £200
67% of retail investor accounts lose money when trading CFDs with this provider.
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Plus500

4.5
Demo account Yes
Minimum deposit 100€
Tradable Assets: CFDs on Forex, Cryptocurrencies, Stocks, Commodities, ETFs, Options and Indices
76.4% of retail CFD accounts lose money.
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Trade Nation

4
Demo account Yes
Minimum deposit -
No minimum deposit ensuring no barrier to entry for beginners
69.9% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Markets.com

5
Demo account Yes
Minimum deposit 250€
Minimum deposit: £250
73.9% of retail investor accounts lose money when trading CFDs with this provider.
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easyMarkets

4.5
Demo account Yes
Minimum deposit 100€
Minimum Deposit: £100
Between 74-89% of retail investor accounts lose money when trading CFDs with this broker.

WHAT IS EUR/NZD FOREX TRADING?

The EUR/NZD forex pair was founded on 1 January 1999 around the time of the Euro’s launch as a formal fiat currency. Initially, the Euro was exclusively digital for accounting purposes, until the first Euro banknotes and cash went into circulation three years later to the day.

The EUR/NZD is deemed a ‘minor’ forex currency pair, simply because it does not involve the US dollar (USD). Nevertheless, the EUR/NZD attracts significant liquidity from forex traders given the various economic and political factors that can affect the value of the New Zealand dollar against the Euro.

As the Euro is listed first, this makes it the ‘base currency’. Being listed second, the New Zealand dollar is known as the ‘quote currency’. The EUR/NZD market demonstrates how much of the quote currency is required to buy a single unit of the base currency.

History of EUR/NZD

The Euro Kiwi is one of the most fascinating minor currency pairs in the forex markets. It combines the official currency of the EU with the New Zealand dollar, which has long been one of the highest-yielding commodity currencies in the world.

Although the Euro has cemented its position as one of the most influential fiat currencies on the planet, the New Zealand dollar also ranks in the top-ten most traded fiat currencies in the forex markets. It has been in existence for 32 years longer than the Euro too, and is also the unit of currency in neighbouring Niue, Tokelau and the Cook and Pitcairn Islands.

Factors that influence the EUR/NZD

The New Zealand dollar is one of the leading commodity currencies, which means that its value is largely driven by the success of its exports. The New Zealand economy is significantly dependent on its agriculture. Whenever there is a surge in demand for the country’s primary exports this can result in a rise in the EUR/NZD currency pair.

Similarly, poor weather conditions that lead to a poor agricultural yield can hamper the nation’s economy and drive the EUR/NZD currency pair down.

The movement in the value of the NZD is also influenced by the success of its trading links with long-time partners like Australia and China.

Furthermore, the economic performance of these key trading partners can also have a knock-on effect on the New Zealand economy.

The Role of the Euro

The Euro has been in existence since 1 January 1999. The European Union long held a desire for a common fiat currency and monetary policy that could foster improved cross-border trading links and a stable continental economy.

Following the launch of the Euro as a physical fiat currency three years later, the Eurozone has evolved into one of the most powerful economic blocs on the planet.

The Role of the New Zealand dollar

The currency of the New Zealand dollar replaced the New Zealand pound as of 1967, following the passing of the Decimal Currency Act in 1964. As of 10 July 1967, the NZD replaced the pound and was valued at two dollars for every New Zealand pound. Approximately 27 million banknotes and 165 million coins were entered into circulation across North and South islands.

More recently, the New Zealand dollar has fared well against the Euro, particularly during the Eurozone crisis and due to the fact that it has benefitted from the exponential growth of China’s economy.

Strategies on forex trading EUR/NZD

The best time to consider trading the EUR/NZD forex market is when the Asian trading session is open. If you want to place trades driven by economic data from the Eurozone, this data is typically published at 6am GMT. Both Asian and European trading sessions overlap between 8 am and 9 am, which creates significant liquidity during this period.

The best strategies to consider when trading the Euro Kiwi include:

  • Range trading
    Pinpointing levels of support and resistance in the market and buying or selling when it reaches those levels.
  • Trend trading
    Identifying medium-term trends in the market where there is an uptrend created by a string of higher highs and higher lows.
  • Trading a pullback
    Catching dips in the market when the EUR/NZD falls after an uptrend – buy low and sell high.
  • ​Fundamental trading
    Monitoring economic news and data, considering the market sentiment and following the weight of money.

When to buy or sell EUR/NZD

In simple terms, you should look to buy the Euro Kiwi forex pair when the value of the New Zealand dollar looks set to rise against the Euro.

You should look to sell the Euro Kiwi when the value of the New Zealand dollar is likely to fall against the Euro.

How to trade EUR/NZD

If you are interested in learning how to open and close trades on the EUR/NZD forex pair, there are plenty of forex brokers listed and reviewed here at FxForex.com. Most of these brokers will allow you to trade the price of the Euro Kiwi using contracts for difference (CFDs) or spread bets.

CFDs are particularly popular among retail forex traders. That’s because they give you the flexibility to go long (buy) or short (sell) with the currency pair, allowing you to speculate on positive and negative economic scenarios.

Profit

If you want to make a profit from your positions on Euro Kiwi in the forex market, you must close your position higher than your opening position. This is particularly true if you open ‘long’ (buy) positions on EUR/NZD. However, if you ‘short’ (sell) EUR/NZD, you need your closing position to be lower than your opening position.

Close your position to take a profit or cut a loss

It doesn’t matter whether your open trades on the EUR/NZD forex market move into profit or loss, you can control your open positions using state-of-the-art trading software.

Most of the forex brokers we review and recommend are compatible with leading software like MetaTrader 4 and 5. It’s also possible to find forex brokers that have designed and built their own proprietary trading software.

Both types of trading software allow you to deploy stop loss and take profit orders in the market to minimise losses and secure a set percentage of profit when positions move in your favour. This automation can improve your efficiency when trading EUR/NZD and other minor forex pairs.

Choose a broker & open an account

To help you choose the right forex broker for EUR/NZD forex trading, we’ve reviewed the leading online brokers based on multiple criteria.

Whether it’s brokers offering demo accounts to help you practice your trading techniques, low minimum deposits or brokers offering the tightest spreads and therefore the closest prices to the daily market rate, we’ve got you covered.

It’s easy to create a new trading account with your chosen broker. Once you’ve read our comprehensive forex broker reviews, just click the direct link to your preferred operator and complete the on-screen registration instructions.

Risks

Before you dive in headfirst to EUR/NZD forex trading, it’s important to be mindful of the following risks involved with trading this forex pair:

The EUR/NZD is still a popular minor forex pair, but its liquidity is inferior to many other currency pairs, which can make it costlier to trade per position.

Lower liquidity results in higher volatility and therefore higher spreads with selected forex brokers.

Trading without prior knowledge of the socioeconomic and political climate in New Zealand and Europe.

Conclusion

Although trading the Euro Kiwi can be more challenging than trading some of the other minor forex pairs, particularly the major forex pairs, the EUR/NZD still offers plenty of potential to profit based on fundamental factors that can influence the pair’s volatility.

Be sure to keep an accurate calendar of data releases involving the New Zealand economy and to follow any announcements or data published by the European Central Bank (ECB).