EUR/USD rises above 1.08 ahead of German IFO data

• EUR/USD is again benefitting from the broad-based weakness in the US dollar. 
• Expectations of a fiscal stimulus package and the resulting risk reset are likely weighing over the dollar. 
• Fed's open-ended QE has bought time, but the US Congress needs to approve the package soon. 
• EUR/USD will likely drop below 1.08 if the forward-looking German data disappoints expectations. 

EUR/USD moved back above 1.08 in Asia as markets offered US dollars and may challenge Tuesday's high in Europe the German IFO data better estimates. 

The greenback came under pressure as the Asian stocks eked out gains, tracking the overnight rally on Wall Street, which was fueled by high expectations of US fiscal stimulus. 

While Congress on Tuesday appeared closer to passing a $2 trillion stimulus package to mitigate the economic fallout from the coronavirus outbreak, it was unclear when the Democrats and Republicans would be ready to vote on the bill. 

Progress is needed soon, else risk assets may suffer another selloff, boosting haven demand for the US dollar. At press time, the S&P 500 futures are reporting a 1.4% drop. 

The American dollar, however, is trading in the red against majors, as indicated by the 0.3% drop in the dollar index. Federal Reserve's unlimited quantitative easing plan has reduced stress in funding markets and bought time for the politicians. 

EUR/USD, however, may fall back below 1.08 if the forward-looking German IFO Expectations Index for March prints well below the expected figure of 82, bolstering recession fears. Across the pond, US Durable Goods data for February is scheduled for release. 

Developments around the coronavirus outbreak and responses by governments across the globe would continue to drive the sentiment in the financial markets. 

Technical levels