EURUSD Holds Between MAs As ZEW Sentiment Deteriorates

On Monday, markets were cautious due to growing concerns that the Iran-Israel conflict could escalate into a broader Middle East crisis. Yesterday, US stock index futures struggled to gain momentum. If global tensions continue to rise this week, major US equity indices could face declines. In such a scenario, the US Dollar (USD) is likely to maintain its strength against its main rivals, potentially limiting the rise of EUR/USD . This could result in the formation of a bearish reversal chart pattern on the weekly timescale. However, risk sentiment is improving and flows are returning to the markets, which is pushing EUR/USD higher, testing the 100 weekly SMA again.

These readings highlight a significant setback for both Germany and the broader Eurozone’s economic recovery efforts. The decline in sentiment indicates growing concerns about the health of the German economy, particularly in its export-driven sectors, which are feeling the pressure from worsening economic conditions in key markets such as the euro area, the US, and China. This downturn in sentiment suggests that the economic environment in both Germany and the Eurozone is becoming increasingly challenging, complicating recovery efforts and potentially leading to further economic strain in the coming months.