EUR/NZD Technical Analysis: Euro Hits 3-Year High Against New Zealand Dollar

The EUR/NZD currency pair has recently surged to a three-year high, with the New Zealand dollar (NZD) currently trading around NZ$1.9687 against the Euro. This level is approaching the peak seen during the COVID-19 pandemic, highlighting renewed Euro strength and NZD weakness in recent weeks.

However, the EUR/NZD pair is now encountering a key technical resistance zone. As observed on the weekly chart, the pair is attempting to break out of a long-standing ascending channel that has been intact since March 2022. This area presents a potential turning point, where profit-taking by traders may begin to emerge.

Adding to the caution, the Relative Strength Index (RSI) is currently at 77, signalling that the pair is overbought in the near term. While an overbought reading does not guarantee an imminent reversal, it increases the likelihood of a short-term pullback. Notably, the RSI last reached similar levels during the COVID-19 market volatility, which preceded a significant correction.

From a technical perspective, the previous resistance along the upper trendline of the channel has now flipped into support, with the price action currently holding above it. A drop below this trendline could prompt a retest of the NZ$1.9000 support level. A further decline might extend towards the NZ$1.8200–NZ$1.8500 range, aligning with the lower boundary of the long-term channel.

On the upside, the next key resistance level lies between NZ$1.9932 and NZ$2.0000. A sustained break and daily close above NZ$2.0000 could open the door for further bullish consolidation, potentially paving the way for a move towards NZ$2.1000 in the medium term.

Key Technical Levels to Watch:

• Support: NZ$1.9000, NZ$1.8500, NZ$1.8200

• Resistance: NZ$1.9932, NZ$2.0000, NZ$2.1000

• RSI: 77 (overbought territory)

• Trend: Attempting breakout from March 2022 channel

Conclusion:

The EUR/NZD pair remains in focus as it tests a critical technical juncture. While the recent uptrend remains intact, overbought conditions and nearby resistance levels suggest that traders should remain vigilant for a potential retracement. Watching how the price behaves around the NZ$2.0000 level will be crucial for determining the next directional bias.