• Business Sentiment in the Union crashed in March, slightly improvement expected.
  • German’s plans to re-open the economy still too conservative.
  • EUR/USD technically neutral, closer to break below the 1.0800 threshold.

The German ZEW Survey, which measures sentiment among business in both, Germany and the Eurozone, is expected to have bounced in April, after collapsing in March to record lows.

Sentiment smashed by the pandemic

Back in March, the Indicator of Economic Sentiment for Germany plunged to minus 49.5 points, the largest drop since the survey was started in December 1991. The slump was equally dramatic for the EU, as the index decreased in the month 59.9 points to also print 49.5. The index that measures the assessment of the current situation in Germany came in at -43.1, adding to the gloom picture.

As the official report states, the slump “was to be expected,” as the economy is “on red alert.” The coronavirus pandemic has put a halt to worldwide activity, something hardly imaginable two months ago. And while the crisis is far from over, Germany is among those countries looking for a way to re-open business.

German Chancellor Angela Merkel announced last week key steps to relax the lockdown, although such measures are quite conservative, and the lockdown will persist at least until May 4.

That said, a bounce in the indexes is expected, although holding near record lows. The Economic Sentiment is expected at -43 in Germany, and at -38.2 for the whole Union. The assessment of the current situation in the EU largest economy is foreseen at -30 from -43.1 previously.

Possible scenarios

Even in the case of upbeat readings, it’s highly unlikely that business confidence will turn positive at this stage. Speculative interest has no reasons to buy the shared currency, as not only the economy is under pressure, but the Union is unable to find common ground to deal with it.

The market, however, won’t be comfortable with below-forecast readings. Despite the FX board is all about the dollar’s demand, the EUR could be affected by a dismal sentiment report, regardless of how speculative interest is positioned on the greenback.

EUR/USD Technical Outlook

The EUR/USD pair has been trading below the critical 1.1000 figure since late March, yet meeting buyers on attempts to breach the 1.0800 threshold to the downside. Whatever the outcome of the report, those levels are expected to hold, although a large deviation could put the pair closer to one of those extremes. Then, it will be the turn of the greenback to determine whether or not the pair could be able to break it.

Technically, the pair is bearish, as, in the daily chart, it continues to develop below all of its moving averages, with the 20 DMA providing resistance at around 1.0930. Technical indicators lack directional strength, but hold within negative levels, a sign that bulls are nowhere to be found. 

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. The author will not be held responsible for information that is found at the end of links posted on this page.

If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.

FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.

The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.

Feed news

Latest Forex Analysis

Latest Forex Analysis

Editors’ Picks

EUR/USD advances after US PCE inflation

EUR/USD pressures weekly highs as US core PCE inflation jumped to 3.4% YoY in May, as expected. High yielding assets accelerate their advances to the detriment of the greenback, as government bond yields hold steady.


GBP/USD battles with 1.3900, still affected by BOE’s decision

GBP/USD remains depressed around 1.3900, pressured by the dovish BOE's surprise offsetting the renewed weakness in the US dollar. Worsening market mood amid Delta covid strain concerns weigh on the pound


XAU/USD rises towards key $1794 resistance ahead of US PCE inflation

Gold is picking up the bid tone in European trading, taking advantage of the retreat in the US Treasury yield and the dollar across the curve. 

Gold News

SafeMoon Price Prediction: SAFEMOON ponders 25% advance

SafeMoon price has underperformed relative to top altcoins but is preparing for a move higher. A retest of the range low at $0.00000257 seems likely before SAFEMOON catapults.

Read more

US PCE inflation preview: Data likely to reaffirm FOMC's hawkish tilt

The US Bureau of Economic Analysis will release the PCE inflation report on Friday, June 25. Markets expect the Core PCE Price Index, the Federal Reserve’s preferred gauge of inflation, to rise to 3.4% on a yearly basis in May from 3.1% in April.

Read more