EUR/USD stalls the upside near 1.1380 post-German IFO

• Benefits from a broadly weaker USD amid expectations of dovish Fed.
• But upside capped by downbeat German IFO survey, focus shifts to US housing data.

The EUR/USD pair stalled its bounce near 1.1380 region, as the EUR bulls were disappointed by a bigger-than-expected drop in the German IFO business climax index. The headline German Ifo business climate index came in at 101.0 for December, weaker than last month’s 102.0 and missing consensus estimates pointing to a reading of 101.8.  

Despite the latest leg down, the spot manages to find support from the ongoing broad-based US dollar weakness amid a sell-off in Treasury yields, as markets have already priced-in a dovish Fed rate hike, in light of mounting global growth concerns, worries on yield-curve inversion and lower inflationary pressures.  

The USD index stalled its Asian bounce and fell back in the red, now trading near 96.90 levels, down -0.18% on the day while the 10-year Treasury yields trade at the lowest levels since August 2018 at 2.825%.

Meanwhile, markets are hopeful that the European Union (EU) may approve the revised Italian budget soon, which eventually lends support to the common currency, as the focus now shifts towards the US housing data for fresh trading opportunities ahead of the key FOMC decision due tomorrow.

EUR/USD Technical Levels