The economic climate index from Germany’s Ifo Institute unexpectedly dropped from 88.0 in November to 87.6 in December, revised down from an earlier 88.1 figure. Analysts had anticipated a slightly better reading of 88.2.
In other details, the IFO Current Rating Index remained stable, hovering between 85.3 to 85.6, while the Expectations Index fell from 90.5 to 89.7 compared to the last report.
Market Reaction
This German data didn’t significantly affect EUR/USD, which has been in a downward trend since the trading day started. As of now, it’s trading about 0.25% lower at around 1.1715.
Today’s Euro Price
The Euro (EUR) is presently weaker against the US dollar compared to other major currencies.
A brief support table is highlighting the day’s percentage changes in various currencies against the Euro, reinforcing that it’s currently the weakest versus the US dollar.
This section was published at 06:30 Japan time as an early look at the German IFO survey.
German IFO Survey Overview
The Ifo Institute’s December economic survey is set for release on Wednesday at 9 a.m. Japan time. Expectations are for the main IFO Business Climate Index to rise slightly to 88.2 from November’s reading of 88.1.
For the current evaluation index, a minor rise from 85.6 to 85.7 is anticipated; however, the expectation index is expected to drop from 90.6 to 90.5.
Potential Impact on EUR/USD
If the IFO business survey data aligns with expectations, the downside potential for the EUR/USD pair may be somewhat limited. If the data surpasses predictions, the euro could see an uptick, especially given recent comments from European Central Bank officials suggesting the need for interest rate cuts in 2026 might not be as pressing.
Traders are likely to keep a close eye on the Eurozone’s Core Harmonized Consumer Price Index (HICP) data set for later today.
The EUR/USD pair could exhibit weakness as the US dollar strengthens, particularly after mixed US labor data for November muddied expectations for further Fed interest rate cuts. Current futures suggest there’s a 75.6% chance interest rates will remain unchanged at the next Federal Reserve meeting in January, which is an increase from nearly 74% last week.
On a technical note, EUR/USD showed a decline around 1.1710 at this point, yet a bullish sentiment lingers as the pair trades within an ascending channel. The 14-day Relative Strength Index (RSI) is above the 50 mark, also suggesting a bullish outlook. The pair could test its recent high of 1.1804 achieved on December 16th. On the lower end, immediate support is at the 9-day EMA around 1.1702, coinciding with a psychological barrier at 1.1700; a further slip could see support at the 50-day EMA around 1.1636.
