The German IFO Business Survey Overview
The German IFO survey for January is slated for release later today at 0900 GMT. The headline IFO Business Climate Index is expected to drop to 100.6 versus 101.0 previous.
The Current Assessment sub-index is also seen weaker at 104.2 this month, while the IFO Expectations Index – indicating firms’ projections for the next six months – is likely to fall to 97.0 in the reported month versus 97.3 last.
Deviation impact on EUR/USD
Readers can find FX Street’s proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 3 and 40 pips in deviations up to 2.4 to -3.2, although in some cases, if notable enough, a deviation can fuel movements of up to 60 pips.
How could affect EUR/USD?
The spot could stall its recovery momentum and drop back below the 1.1300 level on a bigger-than-expected drop in the IFO indicators while the EUR/USD pair could extend the correction further and regain the 1.1350 barrier on a positive surprise.
According to Karen Jones, Analyst at Commerzbank, “Provided that the market holds here then we favor a recovery to the 1.1576 200 day ma and the 1.1623 mid-October high and slightly longer term we target 1.1772, the 55-week ma. Near term rallies will need to regain the 1.1449 1100 day ma to refocus on the topside and while capped here the market will remain on the defensive. Supports at 1.1267, 12.16 are expected to hold.”
Key Notes
German IFO: Downside risks – TDS
EUR/USD Analysis: The post-ECB breakdown opens rooms for a retest of 1.1215, 17-month lows
EUR futures: rebound could gather further pace
About the German IFO Business Climate
This German business sentiment index released by the CESifo Group is closely watched as an early indicator of current conditions and business expectations in Germany. The Institute surveys more than 7,000 enterprises on their assessment of the business situation and their short-term planning. The positive economic growth anticipates bullish movements for the EUR, while a low reading is seen as negative (or bearish).
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