Euro retreats after German investor confidence drops more than estimates

German investor confidence fxcommentThe euro retreated against the U.S. dollar on Tuesday after a report showing German investor confidence tumbled more than forecast in June.

The index of investor and analyst expectations dipped to 31.5 in June from a 41.9 last month, lower than economists’ forecasts of 37.5.

A measure of current condition fell to 53.7 from a prior of 61.2, worse than analysts’ estimates of a drop to 60.3.

Perhaps the renewed worries from Greece are one of the key factors damping investor’s confidence in Europe’s biggest economy.

Talks between Greece and creditors stopped on Sunday after just 45 minutes to put more pressure on the euro ahead of Thursday’s eurozone finance ministers meeting.

In addition, first-quarter growth in Germany came weaker than other European neighbors, yet the Bundesbank raised its growth forecasts for this year and next on June 5.

The EURUSD slipped from peak of 1.1328 to hit a low of 1.1247, while it is currently trading around 1.1264.

The euro rose for its second straight week last week on rise in European bond yields and slide in the dollar.

“If the euro were to appreciate strongly, the result would be downside risks for the economy,” the Bundesbank said in its monthly report.

The main focus will be on tomorrow’s Fed policy statement, as investors will try to get clues about the time at which the Fed would raise its interest rates.

Ahmed Mamdouh

Ahmed Mamdouh, Co-Founder and Head of English Fundamental Analysis at FXComment.com, with 7 years of experience in the financial markets. Mamdouh holds a Master’s Degree in Economics from The American University in Cairo and a Bachelor Degree in Economics from The Faculty of Economics and Political Science, Cairo University.

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