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.

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 shocked with a decline of -6.8 points in July, reflective of the turmoil following the surprise Brexit vote.  The markets are expecting a strong improvement in the August report, with a forecast of a gain of 2.1 points.

Sentiments and levels

The US economy remains generally strong, despite last week’s hiccup from a poor retail sales report. The Eurozone continues to struggle and the ECB remains under pressure to adopt further easing measures. So, the overall sentiment is bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.1335, 1.1230, 1.1190, 1.1140, 1.1070 and  1.10

5 Scenarios

  1. Within expectations: -1.0 to +5.0: In such a case, the euro is likely to rise within range, with a small chance  of breaking higher.
  2. Above expectations: 5.1 to 9.0: An  unexpected higher reading can send EUR/USD above one resistance line.
  3. Well above expectations: Above 9.1: In such a scenario,  a second resistance line might be broken.
  4. Below expectations:  -5.0 to -1.1: A sharper decrease than forecast could  push the pair below  one support level.
  5. Well below expectations: Below -5.0: 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.