EUR/USD: Bulls need a big beat on German IFO Expectations
- EUR/USD trades near 1.1850 versus 1.1833 in early Asia.
- Monday's price action shows indecision in the market place.
- A big beat on German IFO Expectations data is needed to force a bullish close.
The EUR/USD pair is in stasis, and the forward-looking German IFO Expectations index could provide a clear directional cue to the indecisive market.
Two-way business
The pair traded back and forth in the 1.18-1.1906 range on Monday, forming a daily candle with long upper wicks. That's a sign of indecision – both bulls and bears unwilling or unable to lead the price action.
A close above 1.1906 is now needed to put the bulls back into the driver's seat. Alternatively, acceptance under 1.18 would pave the way for a notable bearish move. The pair is currently trading near 1.1850, representing marginal gains on the day.
Focus on IFO
The German IFO Expectations index is seen falling to 93.5 in November from October's 95.00. The data is closely watched as an early indicator of current conditions and business expectations for the next six months, where firms rate the future outlook as better, same, or worse.
A big beat on expectations would alleviate fears of a double-dip recession and put a bid under the single currency, possibly lifting EUR/USD above Monday's high of 1.1906. Germany, the Eurozone's economic powerhouse, is struggling to contain the second wave of coronavirus and has imposed the economically-painful lockdown restrictions. As such, the odds of the IFO data missing forecasts are high. That would shift risk in favor of a drop below Monday's low of 1.18.
Apart from the IFO numbers, the pair could also take cues from the German third-quarter Gross Domestic Product, due at 07:00 GMT, and comments from European Central Bank member Schnabel.
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
