ZEW Economic Sentiment Data for Germany and the Eurozone Sink into Negative Territory in March

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The serious conflict in Ukraine due to the Russian invasion has caused a sharp drop in the ZEW economic sentiment indices for Germany and the Eurozone in March.

In the German country, the indicator has fallen to -39.3 from the +54.3 obtained in February, well below the +10 expected by the market. This is the first drop seen by the indicator since March 2020, in the midst of the outbreak of the coronavirus pandemic in Europe.

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Germany’s Current Situation ZEW has also tumbled, falling to -21.4 from -8.1, its lowest level since May 2021. This is the fourth consecutive month that the indicator is negative, although in March it has slightly improved expectations, since the market consensus foresaw a decline to -22.5 points.

The ZEW for economic sentiment in the euro zone has gone from 48.6 points in February to -38.7 in March, notably disappointing the 49.3 forecast by experts. This is also the first drop seen in the indicator since March 2020 in the region.

EUR/USD reaction

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The EUR/USD it has reacted to the data with a slight retracement of about 10 pips which has taken it to around 1.0995. Prior to the data, the pair reached two-day highs at 1.1019 at the European open. At time of writing, the euro is trading against the dollar above 1.0996, gaining 0.51% on the day.

Source: Fx Street

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