Home EUR/USD: Trading the German ZEW Nov 2015

EUR/USD: Trading the German ZEW Nov 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:  Gernan ZEW recovers to 10.4

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 economic outlook  of the German economy for the next six months.

The indicator has been on a sharp slide throughout 2015 and dropped to  just 1.9 points in October, compared to 12.1 points  a month earlier.  This weak reading was  well off the  estimate of 6.8 points.  The  downward slide is expected to reverse direction in  November, with an estimate of  6.7 points.

Sentiments and levels

The recent consolidation by EUR/USD may have reached its end: after some doubts from the Fed and the ECB, the  weak GDP data out of the Eurozone and Draghi’s  dovish talk are weighing on the euro. Even if the  Fed is very cautious  about  a hike and not rushing towards it, weakness in the euro-zone is setting the tone for the pair. So, the overall sentiment is bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.10, 1.09, 1.0830, 1.0710, 1.0615  and  1.0550.

5 Scenarios

  1. Within expectations:  3.0 to 10.0: In such a case, the euro is likely to rise within range, with a small chance  of breaking higher.
  2. Above expectations: 10.1 to 14.0: An  unexpected higher reading can send EUR/USD above one resistance line.
  3. Well above expectations: Above 14.0: In such a scenario,  a second resistance line might be broken.
  4. Below expectations:  -1.0 to +2.9: A sharper decrease than forecast could  push the pair below  one support level.
  5. Well below expectations: Below -1.0: A very  weak release  could rattle the markets, and EUR/USD could break  a second  support level.

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

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.