Euro Shows Resiliency Ahead Of German IFO

Technical Bias: Bearish

Key Takeaways

• German IFO business climate index will be released later during the London session, which is expected to decline one more time from 104.7 to 104.3.

• Euro likely to face a tough resistance around the 1.2750 level.

• Upside limited as the Euro sellers are still active.

Euro showed some signs of reversal at the start of the week, but it remains at risk of more losses as the market sentiment is still bearish.

Technical Analysis

EURUSD crashed to 1.2616 recently where it managed to find buyers and climbed back higher. The mentioned level acted as a support on a number of occasions. However, the EURUSD pair broke an important bullish trend line on the 4 hour chart which is a solid bearish sign in the near term. The pair is under correction, which could lead it towards a critical confluence resistance area around the 1.2750 level. There is a confluence of 100 simple moving average, 200 simple moving average and the 50% fib retracement level of the last drop from the 1.2885 high to 1.2616 low. So, there is a chance that the Euro sellers might appear around the highlighted resistance area. If the pair manages to break higher and settle above the 1.2750 level, then it might encourage the Euro buyers in the short term. We need to see how the pair reacts around the mentioned level if it reaches there.

On the downside, the 1.2610-00 support area holds a lot of importance as it could continue to act as a monster hurdle for the Euro sellers. If they manage to pierce it, then the EURUSD pair might dive towards the 1.2500 support area.

German IFO Business Climate Index

There is an important economic release lined up during the London session today i.e. German IFO business climate index will be published. The forecast is slated for a decline of 0.4 points from 104.7 to 104.3.