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 8:00 GMT.
Indicator Background
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 continues to move higher, pointing to improving conditions in the German economy, the largest in the Eurozone. In March, the indicator rose to 108.6 points, which was very close to the estimate. This marked a nine-month high. Little change is expected in the April report, with an estimate of 108.3 points.
Sentiments and levels
The euro has been struggling of late, as monetary policy divergence continues playing a critical role in weighing on EUR/USD. Despite concerns about lackluster data out of the US, the Fed will likely raise rates before the ECB. The fragility over the European recovery is expected to continue, and also Draghi could weigh on the euro again. So, the overall sentiment is bearish on EUR/USD towards this release.
Technical levels, from top to bottom: 1.1373, 1.1290, 1.12, 1.1130, 1.1050, and 1.10.
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.
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