When is the German ZEW Survey and how could it affect EUR/USD?
German ZEW Survey Overview
The Zentrum für Europäische Wirtschaftsforschung (ZEW) will release its German Economic Sentiment Index and the Current Situation Index at 10:00 GMT later on Tuesday.
ZEW Survey – Economic Sentiment Index for Germany is expected to improve to 40.0 in November, from 39.3 that came in October. Meanwhile, the Current Situation Sub-Index is expected to improve to -77.5 in the reported month, up from the previous reading of -80.0.
ZEW Survey – Economic Sentiment in Eurozone is expected to rise to 23.5 in November, from 22.7 previously.
How could the German ZEW Survey affect EUR/USD?
The EUR/USD pair may limit its downside if German ZEW Survey data come as expected. Traders will likely observe the upcoming German inflation data, including Consumer Price Index (CPI) and Harmonized Index of Consumer Prices (HICP) data for October, to gain further impetus on the European Central Bank’s (ECB) policy outlook.
The Euro (EUR) could further receive support against its peers amid a prevailing cautious tone surrounding the European Central Bank (ECB) policy outlook. Traders anticipate the ECB will keep interest rates unchanged for now, backed by steady economic performance and inflation near target. Money markets see only a 40% chance of a rate cut by September 2026.
The EUR/USD pair remained weaker as the US Dollar (USD) gained ground amid growing hopes that the US government shutdown resolution is nearing. The US Senate passed a funding bill in a 60–40 vote, effectively ending the 41-day shutdown, with eight Democrats joining Republicans to advance the measure, which now moves to the House for approval.
Technically, the EUR/USD pair is trading around 1.1560 at the time of writing. The bearish bias prevails as the 14-day Relative Strength Index (RSI) remains below the 50 level and prompts the pair to test the immediate support at the nine-day Exponential Moving Average (EMA) of 1.1554. On the upside, the primary resistance lies at the psychological level of 1.1600, followed by the 50-day EMA of 1.1622.
German economy FAQs
The German economy has a significant impact on the Euro due to its status as the largest economy within the Eurozone. Germany's economic performance, its GDP, employment, and inflation, can greatly influence the overall stability and confidence in the Euro. As Germany's economy strengthens, it can bolster the Euro's value, while the opposite is true if it weakens. Overall, the German economy plays a crucial role in shaping the Euro's strength and perception in global markets.
Germany is the largest economy in the Eurozone and therefore an influential actor in the region. During the Eurozone sovereign debt crisis in 2009-12, Germany was pivotal in setting up various stability funds to bail out debtor countries. It took a leadership role in the implementation of the 'Fiscal Compact' following the crisis – a set of more stringent rules to manage member states’ finances and punish ‘debt sinners’. Germany spearheaded a culture of ‘Financial Stability’ and the German economic model has been widely used as a blueprint for economic growth by fellow Eurozone members.
Bunds are bonds issued by the German government. Like all bonds they pay holders a regular interest payment, or coupon, followed by the full value of the loan, or principal, at maturity. Because Germany has the largest economy in the Eurozone, Bunds are used as a benchmark for other European government bonds. Long-term Bunds are viewed as a solid, risk-free investment as they are backed by the full faith and credit of the German nation. For this reason they are treated as a safe-haven by investors – gaining in value in times of crisis, whilst falling during periods of prosperity.
German Bund Yields measure the annual return an investor can expect from holding German government bonds, or Bunds. Like other bonds, Bunds pay holders interest at regular intervals, called the ‘coupon’, followed by the full value of the bond at maturity. Whilst the coupon is fixed, the Yield varies as it takes into account changes in the bond's price, and it is therefore considered a more accurate reflection of return. A decline in the bund's price raises the coupon as a percentage of the loan, resulting in a higher Yield and vice versa for a rise. This explains why Bund Yields move inversely to prices.
The Bundesbank is the central bank of Germany. It plays a key role in implementing monetary policy within Germany, and central banks in the region more broadly. Its goal is price stability, or keeping inflation low and predictable. It is responsible for ensuring the smooth operation of payment systems in Germany and participates in the oversight of financial institutions. The Bundesbank has a reputation for being conservative, prioritizing the fight against inflation over economic growth. It has been influential in the setup and policy of the European Central Bank (ECB).
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