EUR/USD Plunges to 3-Month Low on Dismal German IFO Data
- Dismal German IFO Figures May Boost Speculation for ECB Stimlus
- Euro Falls vs US Dollar to 12-Week Low
- EUR/USD Trading Weak with 200 DMA Just Below
The Euro sank to a 3-month low on the back of disappointing German IFO figures that may further boost speculation for ECB stimulus.
The German IFO gauge of business confidence disappointed across the board as the headline business climate index fell to 110.4 (110.9 estimates vs 111.2 prior), the lowest level in 5-months. Despite the miss, the print falls broadly in line with near- to medium-term trend averages. The gauge for current business confidence came in at 114.8 (115.4 expected vs 115.3 prior) and future expectations also fell to 106.2 (106.5 expected vs 107.3 prior).
“On balance, these figures offer little in terms of directional guidance for the Euro in as much they would do little further to inform speculation about the likelihood of imminent ECB stimulus expansion,” says DailyFX Strategist Ilya Spivak. At present, he has entered short EUR/USD.
The Euro has been under pressure since the ECB meeting on May 8th. The outlook remains bearish as euro economic data worsens amid rampant ECB speculation.
The Euro sank vs the US Dollar following the data release, to the lowest level since February 27, 2014.
“There is a lot to break through at these levels. The 200 day average, October high and 2/27 low continue to hold up,” says DailyFX Strategist Jamie Saettele, “but two reversal attempts since 5/15 have failed. As such, beware a flush into 1.3560/90.” He is currently looking at a EUR/USD diagonal wedge pattern, that if fully retraced yields a target of 1.3294.
EUR/USD 5-Minute Chart using FXCM Marketscope 2.0
-- Written by David Maycotte, DailyFX Research Team. Questions, comments or concerns can be sent to email@example.com.
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