By Areena FxGerman ZEW Survey Overview
The ZEW will release its German Economic Sentiment Index and the Current Situation Index at 0900 GMT in the EU session later this Tuesday, reflecting institutional investors’ opinions for the next six months.
The headline Economic Sentiment Index is expected to come in at 27.3 in September, as against the 34.7 reading booked in the previous month. Meanwhile, the Current Situation Sub-Index is seen falling to -75 during the reported month from -68.6 in August.
How could the German ZEW Survey affect EUR/USD?
Ahead of the data, the prevalent selling bias surrounding the US Dollar (USD) lifts the EUR/USD pair to the 1.1800 mark, or its highest level since July 3. A stronger-than-expected German data might fuel optimism about the economic outlook for the Eurozone’s largest economy and provide an additional boost to the shared currency. This, in turn, should assist the EUR/USD pair in prolonging its upward trajectory.
Meanwhile, the market reaction to any disappointment is more likely to be limited amid diminishing odds for any further rate cuts by the European Central Bank (ECB) and rising bets for a more aggressive policy easing by the US Federal Reserve (Fed). This, in turn, suggests that the path of least resistance for the EUR/USD pair is to the upside, and any corrective pullback could be seen as a buying opportunity.