German economic sentiment surpasses forecasts, lifting the Euro as markets price in a likely ECB rate hike next month.
The EUR/USD pair climbed to 1.1585 in early European trading, supported by stronger-than-expected German ZEW survey data. August’s Economic Sentiment index reached 34.2, beating the 30.0 estimate, while the Current Situation gauge improved to -61.1 from -77.6 in July.
Markets are now pricing a 90%-94% chance of a 25 basis points ECB rate hike to 2.50% at the September 9 meeting. The Dollar index remains resilient despite softer Fed rate hike expectations, holding above its 200-day moving average.
Technical indicators show EUR/USD maintaining a bullish bias, with spot trading above its 100-day moving average. ECB President Christine Lagarde’s upcoming speech may provide further direction.