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EURUSD Downtrend Continues, Amplified by German Economic Weakness

EURUSD Downtrend Continues, Amplified by German Economic Weakness

Nick Cawley, Senior Strategist


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Euro, ZEW Readings and Italian Budget

  • German ZEW readings point to a continued slowdown in the economy.
  • German Q3 GDP release may show the first negative quarter since Q2 2014.

We have just released our Brand New Q4 Trading Forecasts including USD and EUR.

EURUSD Remains Weak After German ZEW Data Highlights Economic Weakness

The latest German ZEW readings highlight the slowdown in Europe’s largest economy with the Economic Sentiment Indicator showing a marginal increase to -24.1. The reading remains heavily in negative territory and well below the long-term average of 22.7. In addition, the assessment of the current economic situation in Germany fell by 11.9 points to 58.2.

According to ZEW President Wambach, “The figures for industrial production, retail sales and foreign trade in Germany all point towards a weak development of the German economy in the third quarter. This is reflected by the fact that the assessment of the current situation has experienced a decline. The expectations of the survey participants for the coming six months do not show any improvement. This means that, at the moment, they do not expect to see a speedy recovery of the currently weak development of the economy.”

While the German figures point to regional weakness, the indicator for the current economic situation in the Eurozone dropped by 13.8 to a level of 18.2. “As a result, the outlook for the Eurozone has deteriorated even more than it has for Germany”, according to the ZEW President.

The first look at German Q3 GDP is released on Wednesday and is expected to show the first negative quarter since Q2 2014. This may well press EURUSD below 1.1200 and back towards the 61.8% Fibonacci retracement level at 1.1187. A break below opens the way to 1.1109 before the 1.0810 – 1.0840 area comes into play.

DailyFX Economic Calendar

In addition to German economic weakness, the single currency may come under additional pressure from the outcome of the Italian budget skirmish between Brussels and Rome.

Euro to Sink Further as Rome Clashes with Brussels Over Budget.

IG Client Sentiment Data show investors are currently 64.5% net-long EURUSD – a contrarian bearish signal – and with recent daily and weekly positional shifts showing retail are further net-long we get a stronger bearish contrarian reading.

EURUSD Daily Price Chart (June 2017 – November 13, 2018)

Traders may be interested in two of our trading guides – Traits of Successful Traders and Top Trading Lessons – while technical analysts are likely to be interested in our latest Elliott Wave Guide.

What is your view on EURUSD – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author at or via Twitter @nickcawley1.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.