ZEW Disappointment Doesn’t Stop EUR/USD

Euro/dollar is on the rise once again: After enjoying better-than-expected PMIs, the highly regarded German ZEW Economic Sentiment provided its worse than expected result – a significant drop to -37.6 points. This result, deep in negative territory and worse than expected sent EUR/USD to struggle with the important 1.4450 line – a line it managed to cross earlier. But support held well and the pair continues higher.

A result of around -25 was expected, after the score was -15.1 last month. This expressed deep pessimism among the 350 analysts and investors surveyed by ZEW in Germany. This is the lowest score since the collapse of Lehman Brothers.

Also the all-European figure was horrible – it dropped to -40 point. Expectations stood on a similar number to last month’s -7 points.

EUR/USD is now just above 1.4450. It had already crossed the line and peaked at 1.4488 on the relatively good PMI figures released earlier. They have shown that the slowdown is not so widespread, and that there are still some sectors in some countries that are growing.

If this line breaks to the downside, support is found at 1.4350, followed by 1.4282. Resistance at 1.4520 was not challenged so far. For more on EUR/USD, see the euro dollar forecast.

There’s another major survey tomorrow: the IFO Business Climate. It is usually optimistic, but last month it disappointed. Later today in the US, New home sales will get attention. Stay tuned.