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27 Jan 2020

EUR/USD prints YTD lows near 1.1015 post-IFO

  • EUR/USD gives away initial gains on IFO.
  • Markets’ focus remains on the Wuhan virus.
  • German IFO missed expectations in January.

After moving to daily highs in the 1.1040 region, EUR/USD is now losing the grip and drops to fresh yearly lows in the 1.1020/15 band.

EUR/USD offered on poor IFO

The pair is now accelerating the downside, losing ground for the third session in a row and printing new 2020 lows around 1.1015 after the German IFO survey came in below expectations in all of its components for the current month.

Indeed, the key Business Climate component dropped to 95.9 from 96.3 (vs. 97.0 exp.), Current Assessment ticked higher to 99.1 (99.2 exp.) and Business Expectations inched lower to 92.9 from 93.9.

In the meantime, the pair continues to follow the developments from the coronavirus in China, where it continues to spread and cloud the global growth prospects.

There are no more publications in Euroland on Monday, whereas December’s New Home Sales will be the only release of note across the pond.

What to look for around EUR

The pair stays well on the defensive and trading in levels last seen in December 2019 around 1.1020/15. Dynamics around the buck are expected to remain the exclusive driver of the pair’s price action for the time being along with alternating risk appetite trends in response to developments from the US-China trade front. In the shorter term, investors will also assess news of the Wuhan virus vs. prospects of global growth. On another scenario, the ECB is expected to finish its strategic review (announced last Thursday) by year-end, leaving speculations of any change of the monetary policy before that time pretty flat. Further out, some better-than-expected results in the euro region as of late seem to have lent support to the idea that the bloc could have left the worst behind, although that view looks premature, to say the least.

EUR/USD levels to watch

At the moment, the pair is retreating 0.04% at 1.1019 and a breakdown of 1.1017 (weekly/2020 low Jan.27) would target 1.1000 (psychological level) en route to 1.0981 (monthly low Nov.29 2019). On the flip side, the next hurdle aligns at 1.1068 (100-day SMA) seconded by 1.1089 (55-day SMA) and finally 1.1130 (200-day SMA).

Jan 27, 2020

Germany IFO - Expectations below forecasts (95) in January: Actual (92.9)

Germany IFO - Expectations below forecasts (95) in January: Actual (92.9)
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Jan 27, 2020

Germany’s IFO: China's virus outbreak has not yet had any impact on German economy

Following the release of the German IFO Business Survey, the institute’s Economist said that he expects German GDP to expand by 0.2% in Q1. More to co
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