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The highly regarded ZEW Economic Sentiment indicator dropped to -16.9 points. Expectations stood on a slide from +10.8 to +3.8.

EUR/USD traded around 1.26 before the publication and it is now falling below this level.

Update: After the initial fall, EUR/USD bounces back into the narrow range.

The current conditions indicator slid from 44 to 33 points, also below expectations. Also the all-European figure fell sharply – from -2.4 to -20.1. Predictions were for a slide to -5.7 points.

In the accompanying statement, ZEW said that the headline number is a “strong warning against too optimistic assessment” for the German economy.

The figure from ZEW is based on a survey of 350 analysts and investors. Another highly regarded economic sentiment figure will be released on Friday from IFO.

Earlier, Spain raised money in the markets and paid an ever dearer price: 12-month bills at 5.074% vs 2.985% at May auction, 18-month bills at 5.107% vs 3.302% in May. At least the troubled country managed to raise all the 3 billion euros.

In Greece, a government will likely be formed soon, and will have a lot to do.

For more on the pair, see the Euro USD forecast.