EUR/USD: Trading the German ZEW Economic Sentiment


German ZEW Economic Sentiment is based on a monthly survey of institutional investors and analysts and their views of the German economy. A reading that is higher than the market forecast is bullish for the euro.

Here are all the details, and 5 possible outcomes for EUR/USD.

Published on Tuesday at 9:00 GMT.

Indicator Background

German ZEW Economic Sentiment surveys financial experts for their assessment of the direction of the German economy in the next six months, based on economic data including inflation, exchange rates and the stock market. This makes the index an important indicator of the economic outlook of the German economy for the next six months.

The indicator improved to 4.3 points in March, short of the forecast of 6.3 points. The markets are expecting a strong improvement in the April report, with a forecast of 8.2 points.

Sentiments and levels

The euro is steady, but the ECB could send the currency lower if it expresses concern about the inflation situation. A drop in oil prices following a failed oil producers meeting could also add to the negative mood on inflation and an April rate hike remains on the table. So, the overall sentiment is bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.15, 1.1460, 1.1365, 1.13, 1.1220 and 1.1140

5 Scenarios

  1. Within expectations: 4.0 to 12.0: In such a case, the euro is likely to rise within range, with a small chance of breaking higher.
  2. Above expectations: 12.1 to 17.0: An unexpected higher reading can send EUR/USD above one resistance line.
  3. Well above expectations: Above 17.1: In such a scenario, a second resistance line might be broken.
  4. Below expectations: -1.0 to 3.9: A sharper decrease than forecast could push the pair below one support level.
  5. Well below expectations: Below -1.0: In this scenario, EUR/USD could break below a second support level.

For more on the euro, see the EUR/USD forecast

Get the 5 most predictable currency pairs

About Author

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.

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