Euro-Zone Investor Confidence May Fall In April

By TraderVox.com

Tradervox (Dublin) – Analysts are expecting the euro area Sentix Investor Confidence survey to show a decrease in investor confidence in the month of April. The investor confidence in the region had rose to an eight-month high in March only to retract this month due to a weakened economic outlook in the region. The drop has been instigated by the recent resurgence of concerns about the debt crisis in the region. This report is expected to cause a selloff in the euro-US dollar pair as the negative results heighten speculation for another monetary support from the ECB.

According to some analysts, the continued risk of a prolonged recession may force the European Central Bank to continue with its easing cycle during this year. According to David Song who is a Currency Strategist, the ECB President Mario Draghi may target the interest rate as the LTRO measures taken have had limited impact on the economy. Since the sovereign debt crisis continues to drag the real economy, investor confidence may be dampened by the impending prolonged recession; this may lead the ECB to leave the door open for more monetary easing and favorable monetary policy as it tries to balance the risks in the euro zone.

The Sentix Investor Confidence will majorly affect the EURUSD pair; where a positive Sentix Survey may push the pair back towards the top of its current range of 1.34 due to an increase in the fundamental outlook for the euro region. Analysts are however expecting the report to show that Investor Confidence has dropped in the month of April which may force the pair to break below the 1.30 support. This would expose the 23.6 percent Fib retracement to the 2010 low of 1.2630-50 from the 2009 high.

Some analysts have suggested that the survey will spark a bearish trend for the euro against the dollar. The drop in Investor Confidence is due to the recent sentiments from the region leaders indicating that the 17-nation trading bloc may be experiencing difficulties in managing its debts.

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