Euro Holds Steady Ahead of German ZEW Survey as Markets Await Sentiment Shift

Euro Stays Calm as Traders Look to German Sentiment Data

The Euro (EUR) is entering the North American session on Monday flat against the US Dollar (USD), extending the consolidation phase following last week’s modest uptrend. With no major catalysts driving momentum early in the week, the common currency is holding steady as markets position themselves ahead of Tuesday’s key economic release: the German ZEW Economic Sentiment survey.

German ZEW Survey Could Spark a EUR Reaction

Tuesday's release of the German ZEW sentiment index is expected to be the key event for the Euro this week. Analysts are pointing to low market expectations, meaning a stronger-than-expected reading could provide a sentiment-driven boost to the Euro. If investor morale in Germany—Europe’s largest economy—improves more than anticipated, the EUR/USD pair could gain bullish traction.

As one analyst put it, “Low expectations mean this could be a possible source of sentiment-based EUR strength in the event of a shock.” This creates an asymmetric risk scenario where positive surprises are more likely to move the market than negative ones.

ECB Policy Expectations Remain a Driver for EUR

The European Central Bank (ECB) calendar remains light this week, leaving relative central bank expectations as a primary driver for the Euro. Markets have recently scaled back their expectations for ECB rate cuts, which continues to support EUR stability.

In contrast, the US Federal Reserve is facing growing pressure to ease rates, a divergence that could further benefit the Euro if data continues to support a more hawkish ECB stance relative to the Fed.

Market Outlook: Consolidation Phase Likely to Persist Short-Term

For now, traders are likely to see continued consolidation in EUR/USD as key data releases approach. The pair could break out of its narrow range depending on how the ZEW figures land, with potential upside if economic sentiment in Germany shows resilience. Until then, relative rate outlooks and macroeconomic sentiment will be the main themes steering Euro trading.