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 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 surged to 13.8 points in November, well above the forecast of 7.9 points.  The upward swing is expected to continue, with the estimate standing at 14.2 points.

Sentiments and levels

With the ECB opting for the dovish route, including the abolishment of the yield limit, the Fed’s hike is likely to reinforce the monetary policy divergence with a rate hike this week. With the extension of the QE program, the fall of EUR/USD could be extended.  So, the overall sentiment is bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.0710, 1.0690, 1.0570, 1.0520 and 1.0460

5 Scenarios

  1. Within expectations: 11.0 to 17.0: In such a case, the euro is likely to rise within range, with a small chance  of breaking higher.
  2. Above expectations: 17.1 to 21.0: An  unexpected higher reading can send EUR/USD above one resistance line.
  3. Well above expectations: Above 21.1: In such a scenario,  a second resistance line might be broken.
  4. Below expectations: 7.0 to 10.9: A sharper decrease than forecast could  push the pair below  one support level.
  5. Well below expectations: Below 7.0: 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.