Germany’s ZEW Economic Sentiment Index Better Than Expected, EUR/USD Beats Resistance

EUR/USD currency pair just narrowly beat a major resistance point of 1.1300 after the announcement made a few hours ago by Zentrum für Europäische Wirtschaftsforschung or ZEW. The announcement was heavily anticipated by the trading community as it has a direct bearing on the price of Euro.

The currency pair suffered insignificant losses in both Asian and European trades after the announcement but has since recovered. It seems that the Euro is reacting appropriately to the news. A moderately positive index is producing a moderately positive rate of the Euro.

In regards to events that could further influence the pair, no major data is set to uncover from the US side as of now. According to experts at the pair is expected to record more gains over the week.

Before this, the EUR/USD currency pair had a relatively mild week. The pair was trading on 1.1297 just a few hours ago, struggling to pass the resistance. Upon the ZEW survey release, the situation was slow to improve but now appears to be headed in the right direction.

The German Economic sentiment was reported to have improved to 3.1. This is more than the expected 0.9 points. The all-eurozone index was also positive, as it rose to 4.2, beating the estimated 1.2 by a significant margin. This was the indicator’s first positive gains since May 2018.

Positive developments regarding ZEW economic sentiment

The economic sentiment index published by the ZEW is a key measure relating to investor confidence and directly affecting the Euro. To put it in layman’s terms, the survey is supposed to highlight the ratio of optimistically-minded investors and analysts against the pessimistic ones.

The indicator has been struggling for the last 12 months, even going down to a 6-year low point and only started to recover in April of 2019. The 3.1 point score indicates an increased level of optimism from institutional investors and experts.

Some of the credit regarding the improved investor moods is often attributed to the Brexit situation, which was further extended recently. The EU and the UK now have until October to arrive at a mutually satisfactory decision. The survey indicated that the investors were hopeful for relatively better results in 2019 than was generally thought before. This is by no means a cause for celebration, as the eurozone is still growing very slowly and Germany itself will likely downsize its growth prognosis for the year, but it still highlights the improved general mood.

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