The 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 Friday at 9:00 GMT.
Indicator Background
Business confidence and spending are key components for economic growth, and an unexpected reading can affect the movement of EUR/USD.
In September, the index came in at 107.4 points, showing little change from the previous month. This fell short of the estimate of 108.2. The markets are expecting a similar reading this time around, with an estimate of 107.9 points. If the index can beat the estimate, the euro could get a boost.
Sentiments and levels
Eurozone indicators continue to point weak economic activity, as weak inflation and GDP figures have shown. Most importantly, ECB members have begun calling for outright QE, like other central banks. Further comments like these could continue weighing on the euro.
In the US, the Fed meeting minutes indicated that QE is not far off and the dollar has gained ground as a result. All in all, it seems that the pair needed to correct some of its falls, and that it might be ready to resume a downward trend. So, the overall sentiment is bearish on EUR/USD towards this release.
Technical levels, from top to bottom: 1.3650, 1.3570, 1.35, 1.3440, 1.34 and 1.3320.
5 Scenarios
- Within expectations: 106.0 to 110.0: In such a case, the euro is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 110.1 to 114.0: An unexpected higher reading can send EUR/USD above one resistance line.
- Well above expectations: Above 114.0: The chances of such a scenario are low. A second resistance line might be broken on such an outcome.
- Below expectations: 102.0 to 105.9: A lower reading than forecast may push the pair below one support level.
- Well below expectations: Below 102.0: In this scenario, EUR/USD could drop below a second support line.
For more on the euro, see the EUR/USD forecast. fffff
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