- ZEW Economic Sentiment slumps to -1.6 in the eurozone.
- Global equity indexes rebound on Tuesday to weigh on safe-havens.
- Coming up: Germany and eurozone GDP readings.
The EUR/JPY pair came under strong bearish pressure during the European trading hours following the mixed sentiment data from the euro area. After slumping to a daily low near 112.60, the pair staged a recovery in the second half of the day and was last seen trading at 112.92, adding 0.2% on a daily basis.
Earlier today, the ZEW’s closely watched sentiment report revealed that the economic confidence in the eurozone weakened in May with the Economic Sentiment Index slumping to -16 and falling short of the market expectation of 1. Similarly, the same index for Germany dropped to -2.1 from 3.1 in April. On a positive note, the Current Situation Index for Germany improved to 8.2 in May to come in better than the market expectation of 7.5.
Commenting on the data, “The decline in the ZEW Indicator of Economic Sentiment shows that the financial market experts continue to expect restrained economic growth in Germany for the next six months,” said ZEW President Professor Achim Wambach. “The most recent escalation in the trade dispute between the USA and China again increases the uncertainty regarding German exports – a key factor for the growth of the gross domestic product.”
Despite the mixed data, some renewed optimism regarding the U.S.-China trade dispute today helped stock markets in Europe close the day sharply higher and paved the way for Wall Street to stage a decisive rebound, making it difficult for the safer JPY to preserve its strength against its major rivals.
During the Asian trading hours, retail sales and industrial production data from China will be watched closely as they are likely to impact the market sentiment. Later in the day, first-quarter GDP figures from Germany and the euro area will be looked upon for fresh impetus.
Technical levels to consider
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