The German Ifo Business Climate is a monthly composite index of about 7,000 businesses which are asked to rate current business conditions and their expectations over the next six months. This makes it a leading indicator of economic health and a major market mover for EUR/USD. A reading that is higher than forecast is bullish for the Euro.
Here are all the details, and 5 possible outcomes for EUR/USD.
Published on Tuesday at 9:00 GMT.
Indicator Background
Traders should pay close attention to the indicator due to its large sample size and accurate forecasts regarding German and European economic conditions and trends.
The indicator has stayed around 106 for the past two months, much lower than the figures seen in June and July, which were over 114. The forecast for December is unchanged, at 106.2. Historically, the markets have been quite accurate in their forecasts, so an unexpected reading is unlikely.
Sentiments and levels
The dollar has been on a roll against the Euro, and we could see more of this trend if the eurozone crisis continues. Meanwhile, the US economy appears to be slowly improving. So, the overall sentiment is bearish on EUR/USD towards this release.
Technical levels, from top to bottom: 1.3280, 1.3212, 1.3145, 1.3060, 1.30, 1.2945, 1.2873 and 1.2734.
5 Scenarios
- Within expectations: 105 to 107.4: In such a case, the Euro is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 107.5 to 108.5: An unexpected higher reading can send EUR/USD well above one resistance line.
- Well above expectations: Above 108.5: The chances of such a scenario are low. A second resistance line might be broken on such an outcome.
- Below expectations: 104 to 104.9: A lower reading than forecast may push EUR/USD below one support level.
- Well below expectations: Under 104: Due to the uncertainties in the Euro zone economy, a sharp decline cannot be ruled out. In this scenario, two or more support levels could be broken.
For more on the Euro, see the EUR/USD forecast.
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