The important German ZEW Economic Sentiment indicator rose from 31.5 to 48.2 points. Early expectations stood on a rise to 35.3 points. Also the all-European surprised to the upside, rising from 31.2 to 42.4, also beyond expectations. If the euro is a proxy for Germany, bulls are now sighing a sigh of relief. This is the highest score since April 2010.
EUR/USD traded around 1.3350 prior to this publication, maintaining the narrow trading ranges seen beforehand. It is now on the rise, and made it all the way to 1.3374 before retreating a bit.
Update: The enthusiasm has been curbed: EUR/USD is back under 1.3350.
This figure strengthens the notion that Germany’s big dive in Q4, a contraction of 0.6% in GDP, was a one time event. ZEW and IFO are considered good gauges for the economy. However, they are not 100% accurate.
The euro is still looking for a direction, after getting hit by Draghi and later by the GDP numbers last week. The euro-zone is in recession, while Germany only saw a one time dip after quite a healthy year.
Resistance is at 1.34, followed by 1.3486. Strong support is at 1.3290. For more, see the EURUSD forecast.Get the 5 most predictable currency pairs