In November, Germany’s ZEW Economic Sentiment index unexpectedly fell to 38.5. Economists had predicted an improvement to 40.0, up from October’s 39.3.
Regarding the current situation, it did see a slight increase from -80 in October to -78.7, although it didn’t meet the anticipated -77.5.
For the euro area, the ZEW Economic Sentiment for November rose to 25.0, exceeding expectations of 23.5, and also up from the earlier figure of 22.7.
Market Reaction
As of now, the EUR/USD is trading a bit higher at around 1.1565.
The Euro has shown some strength against other major currencies today, standing out against the British pound.
The ZEW survey indicated that Germany’s economic sentiment index is anticipated to rise to 40.0 in November, improving from 39.3 in October. The current situation sub-index is expected to go from -80 to -77.5.
Potential Impact of ZEW Study on EUR/USD
If the German ZEW report aligns with expectations, it may cushion the EUR/USD from substantial declines. Traders will be monitoring upcoming German inflation statistics, such as the October Consumer Price Index and Harmonized Index of Consumer Prices, which could further influence the European Central Bank’s policy direction.
There’s a cautious mood regarding ECB policy, with expectations that interest rates will hold steady for a while, thanks to stable economic conditions and inflation near target levels. Currently, market perception suggests a mere 40% chance of interest rate cuts by September 2026.
The EUR/USD pair has faced some downward pressure, particularly as the US dollar gains strength amid rising hopes of a resolution to the US government shutdown. Recently, the U.S. Senate passed a funding bill with a 60-40 vote, effectively putting an end to a 41-day shutdown. The bill now awaits approval from the House.
At present, the EUR/USD trades around 1.1560. A bearish sentiment seems to linger, with the 14-day Relative Strength Index below the 50 mark, which may lead to a test of immediate support around the 9-day Exponential Moving Average at 1.1554. On the upside, key resistance lies at the psychological level of 1.1600, with the 50-day EMA observed at 1.1622.
Economic Indicators
The ZEW Survey measures institutional investor sentiment and showcases the balance between optimistic and pessimistic investors. Generally, a more positive outlook is considered bullish for the euro, while a more negative outlook could dampen it.
