This week, we have seen a great deal of volatility in the Euro, with prices gapping lower against most of the majors. The situation in Cyprus is throwing a good deal of uncertainty into the market, and this could continue if we see poor economic data in this week's ZEW survey. For the Euro area as a whole, the number is expected to show a slight drop to 48.1 (from 48.2 previously). Given the current state of the market, there is scope for a larger move to the downside, so if these numbers do come in weaker than expectations, it should set up some trading possibilities in the EUR/USD and the EUR/JPY. The number will be released on 3/19, at 10:00 GMT.
ZEW tomorrow will be one of the main catalysts for the Euro trading during this week. If it is good the markets could become more stable. If it is bad surely we will see again testing of 1.29 level in EUR/USD and an impulse below.
ZEW was 48.50 slightly better than expected. It didn’t have significant impact as now everybody is watching the how the Cyprus problem will be solved. My opinion is that EU Economy is not in as bad shape as most of the investors are thinking now and latter we could see again strength in EUR markets, but for now all of them are under strong pressure and it is too early and premature now to buy any calls there.