Yesterday the market was relatively quiet and didn’t react much too any macroeconomic data or expectations of more essential events of the week. Though by the end of the European session the pairs gave a start and trading become more active. As a result Euro closed near 1.3390 and Pound around 1.5430. Yesterday’s reaction of the market to the data of E-17 dispelled last doubts: investors really don’t believe that much into perspectives of the region like in January. On Tuesday a survey of ZEW Germany was issued where expectations not only exceeded all forecasts, but also reached the maximum since April 2010. The most interesting thing is that the index doesn’t really have any justification behind it, but only hopes and euphoria of the first months. Perhaps that’s the reason the markets ignored such an abrupt jump of the index, thus letting the Euro hardly get to the maximum 1.3374 and slide back immediately. Nevertheless, during a US session a new maximum was reached at 1.3395.
Apparently the ZEW report is the last outburst of optimism before correction to the more realistic levels. All that can be preceded by more light reports and also restrained comments of some officials. In the comments of Draghi no optimism was noticed, especially in ones about economy weakness. Thus a new wave of weakness and investors’ mistrust is quite possible. If Euro breaks below 1.3330, then it will test a target of 1.3260.
Recent issued data suggests a recovery in terms of employment and industry. The same could be said about the services’ and construction sectors. If the amount of unemployed will show a significant reduction, there will be a good chance of restoring of the pair in the region of 1.5540 after breaking of 1.5480.