Euro edges up above 1.1600 after positive ZEW Economic Sentiment data

• EUR/USD hits session highs beyond 1.1600 as German Economic Sentiment data beats expectations.
• The German and Eurozone ZEW Economic Sentiment Indexers print positive levels for the first time since February.
• Euro upside attempts remain subdued as markets await details on the US-Iran peace deal.

The Euro (EUR) holds a moderately positive tone against the US Dollar (USD) on Tuesday, with the EUR/USD pair returning to levels above 1.1600, following upbeat economic sentiment data in Germany and the Eurozone. The cautious market mood and the mixed German ZEW Economic sentiment Index have failed to derail the gradual Euro recovery.

Data released by the ZEW Institute on Tuesday revealed an unexpected improvement in the economic confidence among institutional investors in Germany, with the index jumping to 10.5  in June from -10.2 in May. This is the first positive reading since the Iran war started, in February, and beats market expectations of a -6 reading.

Likewise, the Eurozone’s ZEW Economic Sentiment Index has also shown an unexpected improvement to 9.5 in this case, from -9.1 in May, beating expectations of a softer increase. to -7.2.

The optimism from these figures, however, has been tamed by further deterioration in sentiment about Germany’s current economic situation, which declined to -81 in June from -77.8 in May, against expectations of a mild improvement to -77.5.

Euro upside attempts remain limited, with investors cautious, awaiting details of the US-Iran peace deal and with the Federal Reserve’s (Fed) monetary policy meeting around the corner.

The Fed is widely expected to leave interest rates steady on Wednesday, with investors focused on the press conference to assess the imprint of the new Chairman, Kevin Warsh, on the bank’s monetary policy stance. Beyond that, the interest rate and economic projections, also due to be released on Wednesday, will provide further insight into potential rate path scenarios and might determine the near-term direction for US Dollar crosses.