The German Ifo Business Climate, a figure which is usually better than other European indicators, unexpectedly rose once again. EUR/USD, that didn’t really enjoy the Chinese news, reacted with a small rise that was erased quickly.
Early expectations stood on a minor drop from 101.5 to 101.2, but another gain was seen to 101.8 points. In the past year, this wide survey of 7000 businesses showed steady growth, even when other indicators such as the ZEW Economic Expectations survey began falling. This moves the common currency:
EUR/USD made a small rise from 1.2310 to 1.2320, but is capped by the 1.2330 resistance line. This better-than-expected result currently doesn’t help the pair.
The European current account, release at the same time, disappointed – a deficit of 5.1 was reported, much worse than a surplus of 1.1 billion euros that was predicted. It’s important to note that the current account is a lagging figure, and that the Ifo Business Climate is of much higher importance.
The Euro had a good start to the week. It opened with a gap and above 1.24. After finding resistance twice at 1.2467, the pair began falling and eventually lost the support level of 1.2330, which was 2008’s low, after Lehman Brothers collapsed.
Towards the release of the Ifo survey, Euro/Dollar recovered from the lows of 1.2284 and traded at 1.2310. But the release rocked it. Support is found at 1.2250 and then at 1.2150 which held the pair before the collapse to the year-to-date low of 1.1876. The round number of 1.20 is also of psychological importance.
A recovery will send the pair for another attempt on the 1.2460 line, followed by 1.2670 which was a swing high.
The Euro-zone is still dealing with serious debt issues that will probably turn into a double-dip recession. Greece, Portugal and Spain suffer from a credit crunch, but austerity measures are taken all across the continent, and also in Britain.
Later today. the new British government will present an emergency budget in parliament.
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