The latest German ZEW economic sentiment report shows a fading optimism in April, in other words, German ZWE misses as economic sentiment wanes. The economic sentiment indicator fell to 4.1, missing expectations of 15.3 and last month's reading of 13. According to ZEW President Professor Achim Wambach, several factors are negatively affecting economic expectations, such as banks' cautiousness in granting loans, high inflation rates, and internationally restrictive monetary policy. Nonetheless, the danger of an acute international financial market crisis seems to have been averted, as earnings expectations for banks and insurance companies have improved compared to the previous month and are once again clearly in positive territory.
After falling by around 170 pips over the last two days, the EURUSD pair is now pushing higher and eyeing a re-test of the 1.1000 level. The US dollar is slipping lower today after rallying on Monday on higher US Treasury yields. The EUR/USD technical set up remains positive with the 20-day simple moving average providing short-term support, while the recent series of higher highs and higher lows remains for now. A multi-week cup and handle pattern is also continuing to play out. A confirmed break of 1.1000 will bring last Friday's multi-month high at 1.1076 back into focus. Support is seen in the 1.0900 to 1.0910 area.
Retail trader data show that 49.02% of traders are net-long with the ratio of traders short to long at 1.04 to 1. The number of traders net-long is 38.26% higher than yesterday and 13.09% higher from last week, while the number of traders net-short is 11.53% lower than yesterday and 0.45% lower from last week. Traders' net-long positions are an indication of their bullish bias towards the EUR/USD pair.
It is important to note that we typically take a contrarian view to crowd sentiment, and the fact that traders are net-short suggests EUR/USD prices may continue to rise. However, traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current EUR/USD price trend may soon reverse lower despite the fact traders remain net-short. This contrarian view on crowd sentiment suggests a possible reversal of the bullish trend for the EUR/USD pair in the near future.
The German ZEW report has led to a decline in the euro against the US dollar in the forex market. Nonetheless, the positive technical set up of the EUR/USD pair has led to a push higher, with traders looking to re-test the 1.1000 level. The report suggests that there may be a reversal in the current trend, indicating a possible sell-off in the near future. Forex traders will be monitoring these developments closely to determine their trading strategies. The potential impact of the German ZEW report and other economic data releases on forex markets highlights the importance of staying up-to-date with global economic news and trends.