The headline German IFO Business Climate indicator dropped to 104.4 points. It was expected to slide from 106.7 to 106.4 points. The “Current Assessment” indicator was expected to tick lower from 109.9 to 109.5 but fell to 107.2 points. The Expectations figure dropped from 103.6 to 101.6 instead of sliding only to 103 points.
EUR/USD traded just under the round 1.30 before the release and is now around 1.2960 after already falling to a low of 1.2954. The pair suffered a downfall yesterday following weak German data and lost the 1.30 line. It later recovered.
IFO is Germany’s most important think-tank. The worse business sentiment joins the worse than expected PMIs: manufacturing is now contracting at a faster pace and services fell back from growth to contraction according to Markit.
There is an interesting phenomenon recently: the euro is on the back foot while yields of Spain and Italy are falling. It seems that fear has moved from the debt crisis to German growth prospects.
Support is found at around 1.2960, followed by 1.2880. 1.30 remains resistance. For more, see the EURUSD forecast.
And here is a live chart of the pair:
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