EUR/USD: Trading the German IFO Mar 2015

German Ifo Business Climate is a monthly composite index of about 7,000 businesses, which are surveyed about current business conditions and their expectations concerning economic performance over the next six months. A reading which is higher than the estimate is bullish for the euro.

Here are all the details, and 5 possible outcomes for EUR/USD.

Published on Wednesday at 9:00 GMT.

Indicator Background

The index remains at high levels, and stayed steady in February at 106.8 points. However, this was shy of the  estimate of 107.4 points. The markets are expecting another solid performance in the March report, with  the  estimate unchanged at  107.4 points.

Sentiments and levels

The euro has recovered slightly, but remains at weak levels against the powerful greenback. The ongoing implementation of QE in the euro-zone  continues to weigh on the pair and Draghi will probably let us know that he will not let go, as seen in his remarks last week.  In addition,  the Greek bailout crisis continues to fester and  could  add more pressure on the euro. We have seen a recovery from the euro thanks to a more dovish Fed,  which removed the “patient” guideline and also said that  it will not move fast once the first hike is announced. Nevertheless, the question remains: what currency would you buy against the dollar? The euro is not the first one that comes to mind. So, the overall sentiment is  bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.12, 1.1113, 1.10, 1.0910, 1.0860  and 1.0760.

5 Scenarios

1. Within expectations: 104.0 to 111.0: In such a case, the euro is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 111.1 to 115.0: An unexpected higher reading can send EUR/USD above one resistance line.
3. Well above expectations: Above 115.0: The chances of such a scenario are low. A second resistance line might be broken on such an outcome.
4. Below expectations: 100.0 to 103.9: A lower reading than forecast  could push the pair below one support level.
5. Well below expectations: Under 100.0: In this scenario, EUR/USD could take a hit  and drop below a second support line.

For more on the euro, see the  EUR/USD forecast.

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