Never miss a story from Justin McQueen

Subscribe to recieve updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from Daily FX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to Justin McQueen

You can manage you subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

EUR Analysis and Talking Points

  • Trade Wars see German Investor Sentiment Plunge to Sep 2012 low
  • ZEW notes that the German Outlook has Significantly Deteriorated Over the Next 6 Months

See our Q2 EUR forecast to learn what will drive the currency through the quarter.

Economic Outlook Worsens

The Euro and DAX saw a muted reaction despite another weak release of the latest ZEW survey. The data showed that the assessment of the economic sentiment in Germany fell sharply by -16.1 points, below the already bearish expectations of -14 points, subsequently tumbling to its lowest level since September 2012. The current economic situation fell by 6.8 points to 80.6 missing an expected reading of 85. As such, this shows that there is no clear sign of a reversal in the soft sentiment towards the Eurozone economy. ZEW noted that the impact of an escalation in a trade dispute with the US has continued to weigh on investor morale with outlook for the next 6 months significantly deteriorating.

Trade Wars Continue to Plague Investor Sentiment

At the beginning of the month the US implemented aluminium and steel tariffs on the EU after both parties failed to agree on a workable solution towards the current trade deficit. As such, a tit-for-tat trade spat has broken out with the EU now preparing to implement retaliatory tariffs on the US from July 1st with the potential for further retaliation if the US impose auto tariffs. This has already had a impact with ZEW reporting worse than expected exports, production and industrial orders in April which has contributed to a more difficult outlook.

EURUSD PRICE CHART: 1 HOUR TIME FRAME (May 2018- June 2018)

Global Trade Wars Weigh on German Sentiment which Falls to Sep 2012 Low

Chart by IG

Euro bulls will be looking towards the ECB meeting, whereby market participants will await for the ECB’s insight for how the central bank will look to exit from its current QE program. Eyes on 1.1840, with a break setting up a test for 1.19. EURUSD finding support off the 100DMA situated at 1.1886.

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX