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Euro, EUR/USD, German IFO Data – Talking Points
- EUR/USD selloff may accelerate after German IFO data is released
- Pair is now sitting right on the cusp of support/resistance at 1.1022
- If EUR/USD is unable to stage a recovery, where could it aim next?
Learn how to use politicalrisk analysis in your trading strategy !
APAC Recap: Mixed Trade Signals
AUD and NZD alongside S&P 500 futures edged higher at the start of Monday’s trading session after Beijing announced over the weekend that it intends on cracking down on IP rights violations. The news uplifted market sentiment alongside hope that China and the US may be able to salvage at least a partial agreement. However, Chinese officials said a “phase 2” agreement is looking less likely as both sides struggle to ratify “phase 1”.
S&P500 Futures, AUD/JPY, NZD/JPY
S&P 500 futures chart created using TradingView
Euro May Fall on Key Sentiment Data
In the absence of major economic news, the Euro will likely place its focus on growing risk trends and the publication of German IFO data. A soft print in the sentiment indicator out of the largest Eurozone economy may lead to a EUR/USD selloff and accelerate its decline. The Euro-Greenback exchange rate is currently hovering just below support-now-turned resistance at 1.1022. Will it capitulate or stage a short-term recovery?
German Economy Outlook
European producers have been hit by trade war angst and slower regional growth amid the ongoing Brexit drama, which has naturally led to a soured outlook. German Ifo data for business expectations, climate and the current assessment are all hovering at their lowest point since the peak of the Eurozone debt crisis in 2014. Given the fundamental outlook, there is still significant scope for these indicators to continue lower.
As the one of the biggest export-driven economies in the world, weak business confidence data out Germany could send a chilling message to its neighbors who strongly rely on robust German growth. The powerhouse economy narrowly missed a recession, though with uncertainty in US-China trade relations and another possible dispute with the EU, the outlook for European growth looks gloomy.
EUR/USD Technical Analysis
As forecasted, after failing to close above 1.1073 with follow-through, EUR/USD capitulated and is now trading just under support-now-turned resistance at 1.1022. Looking ahead, the pair may now look to test the swing-low at 1.0989. A break below that with follow-through could precede an aggressive selloff and further undo the pair’s upside progress since October 1.
EUR/USD – Daily Chart
EUR/USD chart created using TradingView
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--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com
To contact Dimitri, use the comments section below or @ZabelinDimitri on Twitter
