European session review: EUR strengthens after upbeat German ZEW economic sentiment data

EUR rose against its major rivals in the European session on Tuesday, underpinned by better-than-expected German ZEW  economic sentiment survey. 

The latest report from the ZEW revealed a surprise improvement in Germany's economic confidence. The ZEW Indicator of Economic Sentiment rose to 71.5 in August from 59.3 in July. That was the highest reading since January 2004. Economists had forecast the index to decrease to 58.0. Meanwhile, the current conditions index declined to -81.3 in August from -80.9 in the previous month. Economists had expected an improvement to -68.8. "Hopes for a speedy economic recovery have continued to grow, but the assessment of the situation is improving only slowly," ZEW President Achim Wambach, noted. ZEW Indicator of Economic Sentiment for the Euro Area rose from 59.6 in July to 64 in August, the highest reading since April of 2015.

In addition, hopes of tax cuts and more stimulus in the U.S. helped bolster investor risk appetite, putting safe-haven USD and JPY under pressure. The U.S. President Donald Trump stated yesterday that he was "considering a capital gains tax cut, which would create a lot more jobs" as part of his administration's effort to revive the U.S. economy. The announcement came at the time when the U.S. lawmakers are attempting to resume talks aimed at agreeing on a new stimulus package for the world's biggest economy.