ZEW Sentiment Will Help the Euro

ZEW Sentiment Will Help the Euro

What is happening?

Leibniz Centre for European Economic Research (ZEW) will release an economic sentiment index for Germany on January 18, 12:00 GMT+2. This index represents the view of institutional investors and analysts on the current economic conditions. The ZEW survey is historically focused on the German economy, and Germany tends to lead the Eurozone economy, so the Eurozone outlook that is released on the same day tends to be overshadowed by the German data released at the same time.

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The importance of the index for the economy

Usually, ZEW index gives more information about economic health as investors and analysts are highly informed about their jobs. Thus, their sentiment is nothing but important for understanding the market. There are no expectations from analysts about the next release. However, the latest reading suggested that hopes for much more substantial growth in the next six months are fading, as Europe's largest economy struggles with the latest developments in the COVID-19 pandemic as well as the persisting supply bottlenecks on production and retail trade.

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December reading boosted the volatility in EUR/USD, moving it by 650 points in two hours. 

How to trade on ZEW economic sentiment?

Higher numbers mean that economy is recovering, and investors are optimistic, which usually moves the euro higher.

  • If the actual number is higher than expected – EUR will rise.
  • Otherwise – EUR may slide against GBP and USD.

Check the economic calendar

Instruments to trade: EUR/USD, EUR/JPY, EUR/GBP, EUR/CAD.

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