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 Thursday at 8:00 GMT.
Indicator Background
German Ifo Business Climate, a leading economic indicator, is as an excellent barometer of current and future economic conditions. As a market-mover, analysts pay close attention to the monthly releases of the index.
The indicator remains at strong levels, coming in at 108.3 points in July and beating the estimate of 107.7 points. Little change is expected in August, with an estimate of 108.5 points.
Sentiments and levels
The euro has gained ground in August, as rate hike in the US is likely off the table until December at the earliest. Still, the US economy is in much better shape than the Eurozone, which could take a hit as post-Brexit data continues to be released. So, the overall sentiment is neutral on EUR/USD towards this release.
Technical levels, from top to bottom: 1.1410, 1.1375, 1.1335, 1.1230, 1.1190 and 1.1140
5 Scenarios
- Within expectations: 105.0 to 112.0: In such a case, the euro is likely to rise within range, with a small chance of breaking higher.
- Above expectations: 112.1 to 116.0: An unexpected higher reading can send EUR/USD above one resistance line.
- Well above expectations: Above 116.0: The chances of such a scenario are low. A second resistance line might be broken on such an outcome.
- Below expectations: 101.0 to 104.9: A lower reading than forecast could push the pair below one support level.
- Well below expectations: Under 101.0: 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.