Home EUR/USD: Trading The German ZEW Feb 2015

EUR/USD: Trading The German ZEW Feb 2015

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.

Update:  German ZEW Economic Sentiment at 53 – slightly below expectations  

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

Published on Tuesday at 10:00 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 medium-term future of the German economy.

The indicator has been on a sharp upward trend and jumped to 48.4 points in January, well above the estimate of 40.1 points. The positive momentum is  expected to continue,  with  the estimate standing at 56.2 points for the February report. Will the indicator repeat and beat the prediction?

Sentiments and levels

The general direction of EUR/USD is affected by  monetary policy divergence and remains to the downside. Still,  the  euro could bounce back this week if there is some progress  in the  current Greek crisis. In addition, the euro-zone economies are already reaping the benefits from the weaker euro, as was evident in the recent PMIs. In the US, the meeting minutes from the Fed could balance the recent statement  and  present a  more dovish stance regarding  a rate hike. So, the overall sentiment is bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.1650, 1.1540, 1.1460, 1.1373, 1.1270  and  1.1113.

5 Scenarios

  1. Within expectations:  53.0 to 59.0: In such a case, the euro is likely to rise within range, with a small chance  of breaking higher.
  2. Above expectations: 59.1 to 63.0: An  unexpected higher reading can send EUR/USD above one resistance line.
  3. Well above expectations: Above 63.0: In such a scenario,  two or more  resistances line might be broken.
  4. Below expectations:  50.0 to 52.9: A sharper decrease than forecast could  push the pair below  one support level.
  5. Well below expectations: Below 50.0: A very  weak release  could see  EUR/USD break  two or more  support levels.

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Kenny Fisher

Kenny Fisher

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.