German ZEW preview: What to expect of EUR/USD?

The EUR/USD pair extends its rebound from 1.13 handle and remains heavily bid around the mid-point of the last, as increased expectations that Britain will stay in the European Union (EU) keeps the sentiment around the major buoyed.  

Attention now turns towards the German ZEW economic sentiment for April, which will is due for release at 09.00GMT later in the EUR session.

German ZEW sentiment to deteriorate further in June

The ZEW will release its Economic Sentiment Index for the next six months for Germany, as well as the Current Situation Index, reflecting institutional investors' opinions.

Economic sentiment is seen heading lower to 5.1 in June from 6.4 measured in May, while the Current Situation Index is expected to trend up to 53.9 from 53.1 in the previous month.

The markets are expecting the June report to show further deterioration in the German business morale as looming Brexit concerns continue to persists across the financial markets, as we remain just two days away from the much awaited EU referendum.

A better-than expected ZEW print is likely to add to the renewed optimism seen around the EUR/USD pair towards 1.1400 levels. However, the prices may breach 1.1300 support if the data surprises markets to the downside. Although the reaction to the data is expected to be short-lived, as the Brexit-related news flow is likely to remain the main market driver in the upcoming days.

EUR/USD: Technical levels to watch on ZEW 

In terms of technicals, the pair is likely to keep the bid tone intact on an upbeat ZEW print, finding immediate resistance at 1.1393/1.1400 (Apr 13 High/ round number), above which 1.1450 (psychological levels and previous tops) could be tested. Should the data negatively surprise markets, the main currency pair could drift lower to the immediate support placed at 1.1300 (5 & 50-DMA) below which at 1.1279/76 (1h 200-SMA/ 20-DMA) could be tested.