Home EUR/USD: Trading the German ZEW Economic Sentiment

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.

Update: German ZEW Sentiment goes negative -6.8 – Brexit driven

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 surged to 19.2 points in June, crushing the forecast of 5.1 points. The markets a weaker reading in the July report, with a forecast of 8.2 points.

Sentiments and levels

The euro-zone economy is struggling, and the Brexit aftershocks will only exacerbate the bloc’s troubles. The ECB  does not want a higher exchange rate and Mario Draghi could be forced into adopting new monetary measures.  So, the overall sentiment is bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.1230, 1.1175, 1.1070, 1.10, 1.0825 and  1.0780

5 Scenarios

  1. Within expectations: 5.0 to 11.0: In such a case, the euro is likely to rise within range, with a small chance  of breaking higher.
  2. Above expectations: 11.1 to 15.0: An  unexpected higher reading can send EUR/USD above one resistance line.
  3. Well above expectations: Above 15.1: In such a scenario,  a second resistance line might be broken.
  4. Below expectations: 2.0 to 4.9: A sharper decrease than forecast could  push the pair below  one support level.
  5. Well below expectations: Below 2.0: In this scenario, EUR/USD  could break below 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.