Euro Drops Despite Improving Economic Sentiment

The euro dropped against its major peers (with the exception of the US dollar) today even though the economic sentiment indicators for Germany and the whole eurozone improved.

The ZEW Indicator of Economic Sentiment for Germany climbed from 12.8 to 19.5 in April, far above the consensus forecast of 13.2. The index of the current economic situation in Germany also improved. The index of economic expectations for the eurozone improved from 25.6 to 26.3 instead of falling to 25.0 as forecasters had predicted.

Eurozone industrial production dropped 0.3% in February from the previous month while experts had promised it to rise 0.2%. That may be one of reasons contributing to the euro’s drop. The more likely reason, though, is persisting risk aversion on financial markets. Especially damaging to the euro were concerns about the outcome of the upcoming presidential elections in France.

EUR/USD was up a little from 1.0594 to 1.0604 as of 17:50 GMT today, reaching the daily high of 1.0630. EUR/GBP dropped from 0.8527 to 0.8494, backing off from the daily maximum of 0.8548. EUR/JPY slumped 1% from 117.53 to 116.34, trading at the lowest level since November 15.

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