German, Eurozone Investor Sentiment Falls Sharply August

Investor confidence in Germany and the broader Eurozone declined sharply in August 2025, largely due to disappointment over the newly announced EU–US trade deal and weak economic performance in Germany's second quarter. Germany's ZEW Economic Sentiment Index dropped to 34.7 from 52.7, missing forecasts and marking the first decline in four months, while the current economic situation index worsened to -68.6 from -59.5. The Eurozone's ZEW Indicator of Economic Sentiment fell by 11 points to 25.1, also below expectations, with current economic conditions weakening and inflation expectations decreasing slightly. Key German industries including chemical, pharmaceutical, mechanical engineering, metal, and automotive sectors were particularly affected by the negative outlook. Despite these declines, the EUR/USD currency pair remained relatively stable above 1.1600, with the Euro showing weakness against the Swiss Franc. These developments reflect growing concerns among financial analysts about the economic impact of the trade deal and ongoing sectoral challenges in Germany and the Eurozone.