Euro pushes higher on weak ZEW

German investor confidence dropped for a second consecutive month in February, with the ZEW economic index falling to 55.7 from 61.7 in January.

The figure was below the expectations for a print of 61.5, which may well spur the European Central Bank to ease policy in the near future. When the powerhouse of the eurozone economy falters, it generally means it’s time to act.

The euro took a tumble against the dollar in the immediate aftermath of the data release, but has since recovered to push a little higher, and is not testing the top end of the recent range. Breaking through the 1.3740 highs of 24 January could put the single currency on a trajectory to target the key resistance of 1.3833.

Trendline resistance from the all-time 1.6040 highs stands in the way; however, breaking the 1.3810 level convincingly has been a tall order this year and below this there is still a bias for downside. A break through 1.3740 would put the pair on a measured move towards this particular metric.

The 50-hour moving average is supporting the moves to the upside for now. On the downside, 1.3680 – the bottom of the current range – is the next support.

US data will be released later this afternoon; it should provide trading opportunities and a catalyst for direction. The Empire State Manufacturing Index will be released at 1.30pm London time. It is expected to see a pullback to 9.9 from last month’s rather toppy 12.5. The decline in ISM manufacturing last month helps support this possibility. 

EUR/USD spot FX chart

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.

Find articles by analysts

Find out more about