All eyes on the Euro this morning with the release of the ZEW Survey

General market theme
Diverging price action at the beginning of the week for the major instruments we monitor in our daily report as the Euro and Gold continued trading with limited volatility while Gable and the FTSE 100 illustrated quite an active trading behavior. In a day with nothing in terms of news investors took their cue from the Doha meeting over the weekend having to do with oil production and whether there will be a cap in the production levels. With oil being one of the key commodities any major developments affect the risk appetite in the currency markets as well. Today the focus will primarily be on the Euro though with the release of the ZEW Survey being the most market-moving event of the day.

Price action highlights
The Single European currency edged to the upside yesterday and crawled its way above the 1.1300 level to build a basis of support just above this key area. With the ZEW Survey expected to print in a steady manner the Euro could stand to benefit more today while the Dollar remains in the backseat and the next short-term target for the currency lies around the 1.1350 to 1.1400 area. With the ECB meeting on Thursday investors will look to be cautious with the way the Euro will trade in the next couple of days leading up to the meeting so we don’t expect any radical volatility in its price action for the time being.

The Cable though was rather expressive yesterday after the Doha meeting over the weekend and we know how responsive the UK currency can be to risk-on events. The Pound rallied to the upside and made its way to the 1.4300 level and this morning the momentum seems strong and one could suppose that more gains are on the cards. However we need to consider two things: first, the Pound is trading near its recent highs around the 1.4350 area and secondly, the UK employment and Retail Sales reports are due this week and expectations made word for a bearish release in both metrics. Hence any current momentum in the Pound might be reversed pretty quickly as we progress in the week so caution is advised.

Focus of the day
Like we mentioned above today investors’ focus will be on the Euro and the release of the ZEW Survey figures, the report is expected to show a steady level of business confidence in Germany and the Eurozone and that should help the Euro to extend its mini rally to the upside. Other than that the rest of the day only holds tier-3 reports and events that will not have any effect on the price action of the instruments we monitor.

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