EUR/USD Awaits German ZEW as Sentiment Forecasts Darken

Key Moments

The German ZEW Economic Sentiment Index for April is projected at -5.0, down from -0.5 in March.
The ZEW Current Situation Index for Germany is expected to weaken to -70 from -62.0.
EUR/USD trades lower ahead of the release, with key technical levels clustered around 1.1800 on the upside and 1.1728 on the downside.

ZEW Survey Timing and Headline Forecasts

The Zentrum für Europäische Wirtschaftsforschung (ZEW) is scheduled to publish its April German Economic Sentiment Index and Current Situation Index at 09:00 GMT on Tuesday.

Market expectations point to a deterioration in forward-looking sentiment. The ZEW Survey – Economic Sentiment Index for Germany is forecast to decline to -5.0 in April from -0.5 in March. At the same time, the ZEW Current Situation Sub-Index is anticipated to fall to -70 in April, compared with -62.0 previously.

For the broader Eurozone, the ZEW Survey – Economic Sentiment is expected to come in at -3.6 in April, versus a prior reading of -8.5.

Forecast Snapshot

Indicator	Region	Period	Consensus	Previous
ZEW Economic Sentiment	Germany	April	-5.0	-0.5
ZEW Current Situation	Germany	April	-70	-62.0
ZEW Economic Sentiment	Eurozone	April	-3.6	-8.5

Potential Market Impact on EUR/USD

Ahead of the ZEW publication, EUR/USD is trading under pressure, with the pair moving lower as the US Dollar (USD) strengthens in an environment of cautious risk sentiment tied to potential US-Iran peace talks.

A stronger-than-expected ZEW outcome could provide support for the Euro (EUR). On the upside, the first notable resistance is located at the 1.1800 psychological level. Above that, the next barrier is aligned with the April 17 high at 1.1849, followed by the February 9 high at 1.1926.

On the downside, initial support is seen at the April 20 low of 1.1728. A break below this level could open the door to further weakness toward the 100-day Exponential Moving Average (EMA) at 1.1680, with additional downside risk extending to the April 8 low of 1.1588.

ZEW Economic Sentiment – What the Indicator Shows

The ZEW Survey – Economic Sentiment, compiled by the Zentrum für Europäische Wirtschaftsforschung, tracks institutional investor sentiment. It reflects the difference between the share of investors who are optimistic and the share of analysts who are pessimistic about the economic outlook.

In general, an optimistic reading is interpreted as supportive (bullish) for the Euro, while a pessimistic reading is viewed as negative (bearish) for the currency.

ZEW Release Details

Economic Indicator	Next Release	Frequency	Consensus	Previous	Source
ZEW Survey – Economic Sentiment	Tue Apr 21, 2026 09:00	Monthly	-5	-0.5	ZEW – Leibniz Centre for European Economic Research

Background on the Euro and Key Drivers

What is the Euro?

The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day.

EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% of all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).

The Role of the ECB

The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy.

The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa.

The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.

Inflation Data and the Euro

Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control.

Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.

Economic Data and Currency Performance

Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency.

A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall.

Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.

Trade Balance as a Euro Driver

Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period.

If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.