German ZEW Preview: What to Expect of EUR/USD?
pair remains strongly bid above 1.13 handle in the European morning,
although eased-off highs following a positive start on the European
indices. The major finally broke above 1.1330 stiff resistance earlier
this session, as markets preferred to hold the European currency ahead
of the key risk event for the EUR today, the German ZEW economic
sentiment for April, which will is due for release at 09.00GMT.
German ZEW sentiment to improve notably in April
The ZEW will release its Economic Sentiment Index for the next six months for Germany, as well as the Current Situation Index, reflecting institutional investors' opinions.
Economic sentiment is seen heading higher to 8.2 in April from 4.3 booked in March, while the Current Situation Index is expected to trend down to 50.4 from 50.7 in the previous month.
The markets are expecting a strong improvement in the April report as fears over Britain exiting the EU’s membership appear to have eased a bit lately, particularly after the latest Brexit poll results showing polls shifting in favour of the ‘remain’ camp. Moreover, with the price pressures picking up pace in the Euro area as a whole, markets remain optimistic that the ECB easing measures are finally yielding results.
A better-than expected ZEW print is likely to bolster the ongoing bullish run in the EUR/USD pair towards 1.1400 levels. However, the prices may breach 1.1300 support if the data surprises markets to the downside.
EUR/USD: Technical levels to watch on ZEW
In terms of technicals, the pair is likely to keep the bid tone intact on an upbeat ZEW print, finding immediate resistance at 1.1393/1.1400 (Apr 13 High/ round number), above which 1.1450 (psychological levels and previous tops) could be tested. Should the data negatively surprise markets, the main currency pair could drift lower to the immediate support placed at 1.1300/ 1296 (5-DMA/ 1h 50-SMA) below which at 1.1278/74 (daily S1/ Apr 18 Low) could be tested.