German ZEW preview: What to expect of EUR/USD?

The EUR/USD pair is seen consolidating in a narrow range above 1.12 handle, having shrugged-off in-line with expectations German final CPI data. The major is last seen exchanging hands at 1.1225, down -0.09%% on the day.

Attention now turns towards the German ZEW economic sentiment for September, which will be reported at 09.00GMT later in the EU session.

German ZEW sentiment to show solid improvement in Sept

The ZEW will release its Economic Sentiment Index for the next six months for Germany, as well as the Current Situation Index, reflecting institutional investors' opinions. The headline economic sentiment index is seen rising sharply to 2.5 in Sept, after having booked 0.5 in Aug. While current situation index is seen edging lower to 56.0 in the reported month versus 57.6 last.

Limited reaction is expected on the German data, as major action is expected on the comments from ECB Chief Draghi, as he is due to speak at the same time at the 2016 Alcide De Gasperi Award ceremony, in Trento.

Analysts at TDS note, “Given the softer tone we’ve seen to some of the data in Q3 so far, we see downside risks and look for the current assessment to slip to 55.2 (mkt 56.0), and for expectations to fall to -3.0 (mkt +2.5).”

Deviation impact on EUR/USD

Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 15 and 35 pips in deviations up to 2 to -3, although in some cases, if notable enough, a deviation can fuel movements of up to 55 pips.

EUR/USD: Technical levels

Danske Bank Research Team notes, “Higher in consolidation following bounce from the 1.1200 level on Fri. Resistance now at 1.1285 then the 1.1327 high. Long upper wick from the latter seen weighing and while the latter caps, risk is seen for eventual break of the 1.1200 level to see return to the 1.1139/23 lows.”