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Euro Gains on Strong German IFO Results, Reverses from Resistance at 1.33
Tuesday, 27 January 2009 23:01:09 GMT  |  Terri Belkas, Currency Strategist
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The euro started the day off on a strong note following the release of better-than-expected German IFO results, which showed a rise in the expectations component to 79.4 in January from 76.8 while the measure gauging the business climate edged up to 83.0 from 82.6.

Indeed, four rate cuts by the European Central Bank since October and the announcement of a 50 billion euro stimulus plan by German Chancellor Angela Merkel, which was approved today, have provided a few reasons to believe that there’s a light at the end of the tunnel. However, the current assessment index fell to a nearly 6-year low of 86.8 from 88.8, as economic conditions remain bleak and the financial markets are still relatively unstable. Shortly after the economic report, EUR/USD reversed from resistance at 1.33 to form a bearish gravestone doji on the hourly charts, and the pair ultimately ended the day down slightly. Looking ahead to Wednesday, rising trendline support at 1.3150 should be able to keep EUR/USD from falling lower, as there will be little in the way of event risk for the currency in the morning.

Related Article: Euro Weekly Trading Forecast


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