Euro, EUR/USD Analysis, German IFO Data – Talking Points
- Euro could fall if German IFO statistics underwhelm investors
- Slower growth out of largest Eurozone economy may hurt Euro
- EUR/USD rejected for third time at key resistance – now what?
Asia’s start to the week had a mixed reading. US equity futures pointed higher while FX markets remained broadly mixed, a similar dynamic mirrored in APAC stocks. The economically-light data docket puts the focus on fundamental trends with most investors likely watching medical metrics. Economic and monetary policy in the current environment will likely be designed based on what they show.
Euro Outlook Bearish Ahead of German IFO Data Release
The Euro may face higher selling pressure following the publication of German IFO data. Preliminary forecasts for the business climate component are estimated to show a 78.3 print, slightly higher than the prior 74.3 reading. The current conditions and expectations statistics are also anticipated to show an improvement in sentiment as Germany eases its lockdown measures.
However, final prints for Q1 GDP data on a year-on-year and quarter-on-quarter basis may dampen sentiment as all figures are anticipated to show a negative figure. Data out of Germany has a tendency to elicit higher-than-usual volatility relative to its neighbors’ statistics due to it being the largest economy in the region. Consequently, its economic trajectory has larger implications for Europe as a whole and by extent, the Euro.
Coronavirus Cases Globally
Source: Johns Hopkins CSSE
EUR/USD has for a third time been rejected at a stubborn resistance range between 1.0981 and 10989. The pair may now limp back to another equally-obstinate support level at 1.0783. These price parameters have kept EUR/USD range-bound for over a month, suggesting an underlying ambiguity in regards to a directional bias. However, if either parts of the range capitulate, it may signal a change in the pair’s outlook.
EUR/USD chart created using TradingView
--- Written by Dimitri Zabelin, Currency Analyst for DailyFX.com
To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter