When are the German IFO surveys and how they could affect EUR/USD?

The German IFO Business Climate Overview

The German Ifo surveys for December are lined up for release later today at 9GMT. The headline Ifo Business Climate Index is expected to tick lower to 117.1 in January. The Current Assessment sub-index is seen steadying at 125.4 this month, while the Ifo Expectations Index – indicating firms’ projections for the next six months – is likely to ease to 109.4 in the reported month.

Deviation impact on EUR/USD

Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 3 and 40 pips in deviations up to 2.4 to -3.2, although in some cases, if notable enough, a deviation can fuel movements of up to 60 pips.

 How could affect EUR/USD?

The spot could regain poise and head back towards the 1.25 handle on a positive surprise, while a test of 1.2400 levels cannot be ruled out on a bigger-than-expected drop in the headline numbers.

According to Karen Jones, Analyst at Commerzbank, Technically, “EUR/USD has reached the 1.2433 200 month ma. It is immediately bid above the accelerated uptrend at 1.2280. There is scope for an overshoot to the double Fibo at 1.2525/1.2600, the 38.2% retracement of the move down from 2008 and the 61.8% retracement of the move down from the 2014 peak. We have warning signals on the intraday charts BUT the market looks extremely bid. Below 1.2280 lies 1.2165, the 18th January low with further support offered by the 1.2092 September high – the market will remain immediately bid above here.” 

However, the reaction to the data is likely to be short-lived, as all eyes remain on the ECB policy decision for the next direction.

Key notes

Germany: IFO expectations in focus – Danske Bank

Forex Today: NZD regains poise, DXY slumps, German Ifo, ECB – Key

About the German IFO Business Climate

This German business sentiment index released by the CESifo Group is closely watched as an early indicator of current conditions and business expectations in Germany. The Institute surveys more than 7,000 enterprises on their assessment of the business situation and their short-term planning. The positive economic growth anticipates bullish movements for the EUR, while a low reading is seen as negative (or bearish).