Euro Got Direction – Down

6

EUR/USD was looking for a direction at the beginning of the week. With the release of the disappointing German Ifo Business Climate, it got a direction for the rest of the week – down.

The German Ifo Business Climate  is a major figure in Europe’s biggest economy, and it was disappointing: it fell to 82.6, less than last month and less than expectations. About 7000 major German business see the economic conditions fall. The situation suggests less spending and more contraction. 

This figure strengthens expectations that the ECB will lower the interest rate in the Euro zone in the upcoming meeting on March 5th. Jean Claude Trichet acted slowly, and a zero interest rate was not foreseen in Europe. Now, this option is very possible.

Also the Industrial New Orders were bad: -5.2%. Early expectations were very very humble, at a fall of 4.9%, but also this low target was missed.

EUR/USD began the week higher on Monday, climbing to 1.2991. This happened as the US dollar weakened across the board. But on the verge of 1.30, it didn’t have enough air to continue. 

During Monday, it began losing ground, falling below last week’s close up to 1.2664, as Tuesday began. At the beginning of the day it climbed back to to 1.2750.

It was mainly pushed by a surprising figure from France: monthly Consumer Spending rose unexpectedly by 1.8%. Early expectations were for a stable figure of 0.2%.

Currently, the Euro is still in ranging, and did take a direction. Based on these economic indicators, my estimation is that the Euro will make a break downwards. The target is this year’s low of 1.2330.

But of course, I may always be wrong…

Get the 5 most predictable currency pairs

About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

6 Comments

  1. dunhill1907 on

    this does make sense but the usd is more vulnerable to risk since the nationalization and stock and shares takeover process is getting on to take place.
    However the recent VIX shows the strength of dollar to continue gain spikes but not with euro i think. the sentiment matters, but still usd is in the devaluation.

  2. Casey Stubbs on

    You may be right. I am thinking however that this might be a range trading week with a consolodation period. So we could see the pair going back and forth before any directional movements.

  3. yourforexreview on

    i heard that, the nationalization is going to effect the stock. is it right?

  4. Pingback: Prelim GDP Effect On Forex Market | Forex Crunch