Taking a Fundamental Approach to Forex Trading

Trading the Euro with Germany ZEW Survey

ZEW Survey is one of the most powerful economic indicators that have a deep impact on the European currency. Published monthly by the Center for European Economic Research, ZEW indicator is a sentimental piece of data that measures the investor's confidence in the German and European economy. Up to 350 analysts and experts may participate in the survey by giving their opinions about the current and future (next 6 months) economic status in Germany and Europe.

The survey questionnaire has a variety of macroeconomic topics including interest rate, stock market indices, and most important exchange rate. Questions' formula is simple and direct; thus; participants need just to choose one of four characteristics that best matches with their medium term expectations. For example, one of the questions included in the survey may be as following: In the medium term (6 months), the US Dollar compared to the Euro will (revalue- stay constant- devalue- no estimate).

Interpreting the numbers:

1)	A positive number indicates that the number of optimistic analysts exceeds the number of pessimistic ones. (Bullish for the Euro)
2)	A negative number indicates that the number of pessimistic analysts exceeds the number of optimistic ones. (Bearish for the Euro)
3)	Besides numbers, currency traders need to analyze the first few lines of the survey to see if the ZEW indicator is encouraging or disappointing.