Euro-Zone ZEW Survey Emphasizes Brexit as a Source of Uncertainty
- Euro-Zone ZEW Survey of Economic Sentiment up to 20.2 vs 16.8 prior
- German ZEW Survey of Economic Sentiment at 19.2 vs 4.8 expected
- Euro little changed versus the US Dollar
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The Euro was little changed versus the US Dollar (at the time this report was written) after today’s Euro-Zone ZEW Survey showed Financial market experts' sentiment concerning the Euro-Zone’s economy is more optimistic.
The Euro-Zone’s sentiment figure printed 19.2, which was above the prior 4.8. The Current Situation Assessment declined slightly to -10.0 in the Euro-Zone from the prior -9.2.
The German ZEW Survey of Economic Sentiment index rose to 19.2 from the prior reading of 6.4, and was above economist’s expectations of a drop to a 4.8 print. The German Current Situation figure rose to 54.5 from the prior 53.1 reading, above the expected 53.0 figure.
A reading above 0.0 indicates optimism, while below indicates pessimism. 202 analysts participated in the June survey.
Looking into the press release, ZEW said that the weak global economic dynamics remain challenging, but the major source of uncertainty is the upcoming EU Referendum in the UK.
With “Brexit” seemingly absorbing most of the market’s focus at the moment, it seems the market interpreted the ZEW figures as not sufficient to generate a significant move, and the Euro was little changed versus the US Dollar.
Meanwhile, the DailyFX Speculative Sentiment Index (SSI) is showing that about 42.4% of traders are long the EUR/USD at the time of writing. Retail traders flipped net short June 16, and increased shorts on the rise, apparently trying to pick a top. This reading seems to be confirmed by the fact that short positions have been reduced slightly on a pullback lower (see the “Traits of Successful Traders” research).
The SSI is mainly used as a contrarian indicator, implying a further strength ahead for the pair.
You can find more info about the DailyFX SSI indicator here
EURUSD 5-Minute Chart: June21, 2016
--- Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.