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.
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
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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