German ZEW Sentiment Plunges as Iran War Fallout Hits Europe's Largest Economy

The German ZEW Economic Sentiment index plunged to -17.2 in April, significantly missing analyst expectations and hitting a three-year low. Adding to the gloom, Germany has halved its 2026 GDP growth forecast and raised its inflation outlook, signaling a more persistent stagflationary environment. The Current Situation Index also dropped to -73.7, highlighting the profound deterioration in Europe's largest economy. Analysts attribute this collapse to the broadening fallout from the war in Iran and its potential impact on global energy stability. Amidst this uncertainty, the ECB is expected to maintain a cautious stance during its upcoming meeting. This combination of weak sentiment and downgraded growth forecasts is expected to weigh heavily on the EUR/USD pair as geopolitical risks intensify.