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Euro Declines Following Unexpected Drop in ZEW Economic Sentiment

The euro declined across the board on Tuesday, after a key gauge of German investor confidence declined unexpectedly in April, as fears about the global economy hurt the economic outlook.

The ZEW economic sentiment index, a closely-watched survey of German investor sentiment, declined for the first time in six months, slipping to 53.3 in April from 54.8 in March. The reading was well below expectations calling for 55.3.

“The German economy is in good shape. A stable labour market and increasing wages are strengthening confidence and boosting consumption,” said ZEW President Clemens Fuest in a statement.

“However, the current weakness of the world economy is dampening export prospects and reducing the scope for further improvements of the economic situation in Germany.”


Technical Bias: Bearish

The EURUSD plunged below 1.07 in the European session, later consolidating at 1.0708 in New York. That represents a loss of 0.3 percent. The pair is trading below its long-run moving average (SMA100), where it faces a negative bias. The EURUSD is likely to re-test the 1.0693 support. A daily close below that level exposes 1.0647 as the next target. On the upside, initial resistance is likely found at 1.0767.





Technical Bias: Bearish

The EURGBP tested lows near 0.7165 on Tuesday, although managed to trade within a tight range for much of the European session. The EURGBP was down 0.25 percent to 0.7189 in the early New York session. Initial support is located at 0.7181 and resistance at 0.7232.





Technical Bias: Slightly Bearish

The EURJPY recovered from a daily low of 127.46, which was also the next support target. The pair rebounded to 127.87 in the early New York session and is trading above its long-run averages (SMA100 and SMA200). The pair’s next resistance test is located at 128.66.



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