Accordingly the German ZEW economic sentiment survey was released at the lowest level since 2012. This may be taken as another indication for a weakening risk asset-related capital flow situation to the detriment of the EUR.
In an environment of slowing capital inflows we expect the single currency to become more sensitive to monetary policy expectations.
Accordingly, further room of diverging Fed-ECB monetary policy expectations should keep EUR/USD subject to downside risk.
As a result to the above outlined conditions we remain short EUR/USD as a trade recommendation.
CA maintains a short EUR/USD position from 1.3780 targeting 1.3300.