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.
Here are all the details, and 5 possible outcomes for EUR/USD.
Published on Tuesday at 9:00 GMT.
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 fairly steady in 2015, but took a plunge in the May release. The indicator fell to 41.9 points, compared to 53.3 points a month earlier. The May figure was well off the estimate of 48.8 points. The downward trend is expected to continue, with an estimate of 37.5 points for the June report. Will the indicator surprise the markets and beat this prediction?
Sentiments and levels
The Greek crisis continues to way heavily on the euro. Even if the crisis is somehow resolved this week (and that is a big if), monetary policy divergence still plays a key role. German Chancellor Merkel is putting her weight behind the ECB and against EUR strength and ECB Governor Draghi will likely hold the course on QE. Over in the US, the Fed Statement could revive the greenback, which is trying to recover from an off-week. So, the overall sentiment is bearish on EUR/USD towards this release.
Technical levels, from top to bottom: 1.1450, 1.1373, 1.1290, 1.1190, 1.1050 and 1.10.
5 Scenarios
- Within expectations: 34.0 to 41.0: In such a case, the Euro is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 41.1 to 45.0: An unexpected higher reading can send EUR/USD above one resistance line.
- Well above expectations: Above 45.0: In such a scenario, a second resistance line might be broken.
- Below expectations: 30.0 to 33.9: A sharper decrease than forecast could push the pair below one support level.
- Well below expectations: Below 29.0: A very weak release could rattle the markets, and EUR/USD could break a second support level.
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