EUR/USD: Trading the German IFO Sep 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 Thursday at 8:00 GMT.

Indicator Background

Ifo Business Climate, a leading economic indicator, is as an excellent barometer of current and future economic conditions. An unexpected reading can have a strong impact on the movement of EUR/USD.

The indicator remains at high levels, and came in at 108.3 points in August, ahead of the forecast of 107.6 points. The markets are expecting a weaker reading for September, with an estimate of 107.8 points. Will the indicator repeat and beat the prediction?

Sentiments and Levels

ECB head Draghi degraded the euro to a second tier safe haven currency, and now the Fed made things gloomier, basically placing the dollar above the euro in times of trouble. The Chinese crisis, weak data out of Europe and Draghi are set to push the pair lower. So, the overall sentiment is bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.1373, 1.13, 1.1215, 1.1113, 1.1050, 1.0950.

5 Scenarios

1. Within expectations: 104.0 to 112.0: In such a case, the euro is likely to rise within range, with a small chance of breaking higher.
2. Above expectations: 112.1 to 116.0: An unexpected higher reading can send EUR/USD above one resistance line.
3. 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.
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: Below 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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