"Germany's economy is strong and solid, especially when you consider the fact that domestic demand is the main reason for growth"
- Stefan Schneider, chief international economist at Deutsche Bank AG
After a bunch of disappointing fundamental data and pessimistic comments from Europe, a release of German ZEW economic sentiment index acts like a sip of fresh air for Euro optimists. The ZEW Center for European Economic Research said a gauge of investor and analysts expectations, which is designed to predict economic performance during the next six months, soared to 54.6 in November, up from 52.8 a month earlier, beating analysts' estimates for a 54.0 reading. Nonetheless, market reaction was tepid, as EUR/USD has moved to 1.3542 and almost immediately plunged back to 1.35.
Even with German economy slowing to 0.3% in the third quarter and business confidence unexpectedly moving lower, the Bundesbank said the Europe's largest economy still remains on a solid growth path. The main reasons behind such a suggestions are stronger-than-expected factory orders and a steep decline in unemployment that remains around two-decade low.
During the last week, the single currency gained almost 1% versus the U.S. Dollar; however, it is currently facing a strong resistance at 1.35, and a strong bullish impetus will be needed to push the pair above it. Nevertheless, the tone of the FOMC minutes will set the development for the pair this week.
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