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Euro Breaking News: EUR/USD Slips on Poor EU ZEW Economic Sentiment Data, Parity at Risk

Euro Breaking News: EUR/USD Slips on Poor EU ZEW Economic Sentiment Data, Parity at Risk

Warren Venketas, Analyst

EUR/USD TALKING POINTS

  • ZEW Economic Sentiment Index (JULY) – ACT: 0-53.8
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EURO FUNDAMENTAL BACKDROP

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The euro’s initial reaction to the ZEW economic sentiment index misses from both Germany and the eurozone respectively (see economic calendar below) was expectedly negative testing the much talked about parity level. The -53.8 read for the EU region was the lowest print since November 2011 thus reiterating the fading level of optimism withing the eurozone. I believe the 1.0000 psychological support zone will not hold and is likely to be penetrated in the short-term. Risks facing further euro weakness include the potential energy crisis, an increasingly hawkish Fed and recessionary fears backing havens like the U.S. dollar. Looking ahead, U.S. inflation will be the focus tomorrow with markets looking for further guidance around the U.S. economy.

EUR/USD ECONOMIC CALENDAR

EU ZEW Economic Sentiment Index

Source: DailyFX economic calendar

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TECHNICAL ANALYSIS

EUR/USD DAILY CHART

eurusd daily chart

Chart prepared by Warren Venketas, IG

Resistance levels:

  • 1.0064

Support levels:

  • 1.0000
  • 0.9854

IG CLIENT SENTIMENT DATA: BEARISH

IGCS shows retail traders are currently LONG on EUR/USD, with 74% of traders currently holding long positions (as of this writing). At DailyFX we typically take a contrarian view to crowd sentiment resulting in a short-term downside bias.

EUR/USD Bearish
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 7% -11% -4%
Weekly -5% -6% -6%
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Contact and follow Warren on Twitter: @WVenketas

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

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