EUR/USD: IFO Adds To European Green Shoots

Another positive release has the Euro up and over the 1.3400 psychological resistance in end-of-the-week trading. The break is key as it opens up the possibility of the single currency pushing ahead of the next level of resistance – which lies at 1.3540. So, what’s behind the big push higher?

Confidence Abound

Reinforcing the notion of a better than expected turn around in the German economy, the Ifo Institute released business sentiment results that rose above expectations. For the third straight month, the business survey climbed, rising to a 104.2 January reading – compared to December’s 102.4. This is the highest level since June and a positive gain over a 2 ½ year low in the survey in October.

Subsequently, subindex readings were additionally bullish, with current economic expectations improving to 108 from 107.1. Future expectations were even brighter, with the survey component gaining to 100.5 from 98.

Overall the survey’s positive results reinforce the notion that the German economy will continue to remain resilient against notions of economic contraction in the European Union. Although the German economy slowed to just 0.7% in 2012, estimates remain stable that Germany will be one of the only productive EU economies in 2013.

Green Shoots Sprouting

Incidentally, the Ifo uptick is being held in conjunction with previously released investment community sentiment and low unemployment.

According to Tuesday’s release of the ZEW economic sentiment survey, investors are additionally growing bullish over the prospects of the European Union – amid lingering signs of the already 3 year crisis. The survey surged for the second month in a row, rising 24.6 points to 31.5 in January.

Unemployment, additionally, remains bullish. Although jobless claims gained slightly in December, the national unemployment rate continues to reside at a 2-decade low of 6.9%.

Technical Implications

Now with the 1.3400 psychological figure cleared, the EURUSD has room to advance on the next viable resistance barrier at 1.3479. The figure should lend some credence for a short term pullback, with medium term targets being eyed at 1.3546.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these securities. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Forex involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility.

RELATED TOPICS