EUR/USD on positive territory amid ZEW optimism about Euro zone economy

The euro registered gains against the US dollar on Tuesday, following an upbeat set of ZEW indicators out of the Euro zone and Germany, which bolstered optimism, regarding economic recovery in the region.

EUR/USD reached a new session high at 1.3367 at 9:00 GMT, after which consolidation followed at 1.3362, gaining 0.21% for the day. Support was likely to be received at psychological level of 1.3300, while resistance was to be met at September 16th high and also a three-week high, 1.3384.

Earlier today the ZEW (Zentrum für Europäische Wirtschaftsforschung) institute said that the German index of economic sentiment increased by 7.6 points to reach a value of 49.6 in September, significantly exceeding preliminary estimates of a reading of 45.0. It seemed that experts on financial markets retained their expectations that German economy was gaining momentum. This implied optimism was a result of improved economic outlook for the single currency bloc, despite the fact that recent German economic data remained below forecasts. The ZEW current situation indicator for Germany also demonstrated a considerable improvement in September, gaining 12.3 points to reach 30.6, while expectations pointed a much lesser increase to 20.0. ZEW economic sentiment indicator for the Euro zone rose by 14.6 points to 58.6 in September, while the ZEW index of current situation improved 14.4 points to reach -59.7 in September.

In addition, Euro zones trade balance recorded a larger surplus in July, but however, the drop in export, according to seasonally adjusted data, suggested that economic recovery was still frail. According to a report by Eurostat, the surplus on blocs trade balance was 18.2 billion EUR in July, as in July 2012 the surplus figure was at the amount of 13.9 billion EUR. Seasonally adjusted export decreased by 1.6% in July compared to June, while import ticked down a mere 0.1% during the same period. Export was one of the major elements, which dragged economy out of the long recession during the second quarter of the year and with it decreasing, as data showed, it might be uncertain how stable recovery in the region will be.

At the same time, the surplus on Euro zones current account shrank in July for the fourth consecutive month. The European Central Bank said that the surplus on the seasonally adjusted current account reached 16.9 billion EUR in July after the 19.8-billion-EUR surplus figure in June, which was a revision up from 16.9 billion EUR previously. Austerity policy in less-developed economies in Europe seemed to have pressured the imported goods and services for domestic consumption, encouraging countries to increase their export in order to strengthen growth.

Meanwhile, the euro was higher against the sterling, with EUR/GBP cross advancing 0.10% for the day to trade at 0.8398 at 11:55 GMT. EUR/JPY pair was gaining 0.28% to trade at 132.50 at 11:56 GMT.