Home EUR/USD:Trading the German Ifo Business Climate

EUR/USD:Trading the German Ifo Business Climate

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

  1. 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.
  2. Above expectations: 107.5 to 108.5: An unexpected higher reading can send EUR/USD well above one resistance line.
  3. 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.
  4. Below expectations: 104 to 104.9: A  lower reading  than forecast  may push EUR/USD  below one support level.
  5. 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.


Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.