EUR/USD holds above 1.1550 as strong German ZEW data and ECB hike bets support the euro. Traders watch 1.1614 and 1.1650 for the next bullish move.
EUR/USD trades near 1.1585 in early European hours Wednesday, maintaining a constructive tone as stronger-than-expected German economic data supports the euro. The pair gained after Germany’s ZEW Economic Sentiment Index climbed to 34.2 in August from 26.3 in July, beating the 30.0 market forecast.
The improvement was also visible in the ZEW Current Situation Index, which rose to -61.1 from -77.6, exceeding expectations of -68.8. The figures suggest that investor confidence in Germany’s economic outlook is improving, giving the euro additional support against the dollar.
Attention now turns to European Central Bank President Christine Lagarde, who is scheduled to speak later Wednesday. Markets are increasingly positioning for further ECB tightening, with the ECB Watch Tool showing a 90%-94% probability of a 25-basis-point increase to 2.50% at the September 9 meeting.
Euro Gains From Strong German Data
The euro’s recent strength reflects improving expectations for European monetary policy. Stronger economic sentiment could reinforce the case for maintaining a restrictive ECB stance if growth and inflation remain resilient.
Meanwhile, the U.S. dollar has remained relatively firm despite reduced expectations for aggressive Federal Reserve policy. MUFG analysts said recent U.S. data has eased rate-hike expectations but has not triggered significant liquidation of long-dollar positions.
The Dollar Index remains above its 200-day moving average at 99.185, indicating that dollar bulls still have an important technical foothold.
- German ZEW sentiment: 34.2
- August forecast: 30.0
- ECB hike probability: 90%-94%
EUR/USD Technical Outlook Stays Bullish
EUR/USD retains a positive near-term structure on the daily chart. The pair is trading above its 100-day moving average and the Bollinger middle band, supporting the view that buyers remain active after the recovery from lower-band support around 1.1364.
Momentum indicators also favor the bulls. The 14-day Relative Strength Index stands at 63.8, showing strong buying momentum without yet reaching traditionally overbought territory.
The first major upside test is the August 17 high at 1.1614. A sustained break above that level could expose the Bollinger upper band near 1.1650, where sellers may attempt to limit further gains.
Key EUR/USD Levels to Watch
On the downside, the 100-day moving average around 1.1570 provides immediate support. A break below it could shift attention toward the Bollinger middle band at 1.1505.
If selling pressure intensifies, the next significant area is the lower Bollinger band near 1.1365. Holding above these support levels would preserve the broader bullish structure.
For now, EUR/USD remains supported by stronger German sentiment, expectations of ECB tightening and a dollar that has yet to generate a decisive bearish reversal. A move through 1.1614 would strengthen the bullish case and place 1.1650 firmly in focus.
Sources & Methodology
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