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.
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 medium-term future of the German economy.
The indicator has been on a sharp slide throughout 2014 and dropped to 46.6 points last month, well short of the estimate of 52.8. The reading for the March release stands at 46.3 points. Will the indicator reverse directions and beat the prediction?
Sentiments and levels
The dollar was broadly lower last week as the FOMC minutes were more dovish than expected. However, this move is somewhat overextended, especially as US employment numbers have been solid. As for the euro, it appears to be overvalued and high and Mario Draghi could make an appearance and talk down the currency as it approaches 1.40. In addition, inflation numbers are likely to be revised to the downside, weighing on the euro. So, the overall sentiment is bearish on EUR/USD towards this release.
Technical levels, from top to bottom: 1.40, 1.3964, 1.3895, 1.3830, 1.38 and 1.3740.
5 Scenarios
Within expectations: 43.0 to 46.0: In such a case, the Euro is likely to rise within range, with a small chance of breaking higher.
Above expectations: 46.1 to 50.0: An unexpected higher reading can send EUR/USD above one resistance line.
Well above expectations: Above 50.0: In such a scenario, a second resistance line might be broken.
Below expectations: 39.0 to 42.9: A sharper decrease than forecast could push the pair below one support level.
Well below expectations: Below 39.0: A very weak release could rattle the markets, and EUR/USD could break a second support level.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities.
Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
AUD/USD stays directed toward 0.6500 as RBA's Bullock speaks
AUD/USD is extending losses toward 0.6500 in Asian trading on Tuesday. The Aussie Dollar remains offered after the Reserve Bank of Australia extended the pause. Markets digest the less hawkish policy statement while Governor Bullock's press conference gets underway.
USD/JPY holds gains below 150.00 on the expected BoJ rate hike
USD/JPY holds gains below 150.00, as the Japanese Yen stays vulnerable amid a classic 'sell the fact' trading on the hawkish BoJ decision. The BoJ lifted the interest rate by 10 basis points (bps) from -0.1% to 0% for the first time since 2007 and abandoned the YCC framework.
Gold price flat-lines above one-week low, awaits the crucial Fed decision on Wednesday
Gold price oscillates in a range and is influenced by a combination of diverging forces. Hawkish Fed expectations, elevated US bond yields and a bullish USD cap the upside. Geopolitical risks lend some support to the XAU/USD ahead of the key FOMC meeting.
Bitcoin price shows weakness, but new BTC whales have created solid support at $56,400
Bitcoin price downside momentum continues to gain strength, giving sidelined and late bulls a chance to buy the dip. The market remains focussed on the oncoming halving, expected to kick off the next bull cycle. For the meantime, however, spot BTC ETFs remain the main play in the market.
Lots of tension ahead of this week's Fed decision
Last week, we got a strong round of US economic data accompanied by hotter US inflation reads. The takeaway of course is that there might be a lot more pressure on the Fed to be looking to scale back its rate cut outlook at this week’s meeting.