EUR/USD: Recovery picks up steam as S&P Futures leaps to 2019 highs to weigh on USD
|- ZEW Economic Sentiment in Germany rises more than expected.
- Risk-on flows start to dominate the market action on Tuesday.
- US Dollar Index fails to recover above 97 ahead of mid-tier data.
The EUR/USD slumped to a session low of 1.1280 following the mixed macroeconomic data releases from the euro area and reports of the European Central Bank policymakers being sceptical about the growth projections for the second half of the year. However, with the risk appetite gathering strength in the last couple of hours, the shared currency started to erase its losses vs the greenback, lifting the pair back above the 1.13 mark. At the moment, the pair is posting small gains on the day at 1.1305.
Earlier today, citing people familiar with talks, Reuters reported that several ECB policymakers questioned the bank's projection model and voiced their doubts about the accuracy of the growth projections for the second half of 2019 and hurt the demand for the euro.
Meanwhile, today's data from Germany showed that ZEW's Economic Sentiment indicator improved to 3.1 in April from -3.6 in March to record the first positive reading in a year, which suggest that the number of "optimistic" survey participants surpassed the number of "pessimists." Similarly, the same indicator for the eurozone rose to 4.5 from -2.5 to beat the market expectation of 1.2. On the other hand, the Current Situation Index in Germany slumped to 5.5 to miss the analysts' estimate of 8.
Commenting on the ZEW's Germany figures, "The slight improvement is largely based on the hope that the global economic environment will develop less poorly than previously assumed. The postponement of the Brexit deadline may also have contributed to buoy the economic outlook,” ZEW President Achim Wambach said, as reported by Bloomberg.
Although the ECB headlines and the mixed data didn't allow the pair to gain traction, a renewed bearish pressure on the greenback caused the pair to stage a recovery. The USD, which has been finding demand as a safe-haven since the start of the year, lost interest as the S&P 500 Futures climbed to its highest level since early October of 2018 and the 10-year T-bond yield added nearly 1% on the day to touch its best level since March 20. Hurt by the risk-on flows, the US Dollar Index failed to rebound above 97 to help the pair cling to its recovery gains.
Technical levels
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.