EUR/USD sees a sharp rise in 1-month 25D Risk Reversal, eyes German IFO

Omkar Godbole FXStreet Contributor

Monday’s pullback in the EUR/USD pair to 1.1626 was short lived as the offered tone around the USD gathered pace in Asia, pushing the spot above the 1-hour 50-MA of 1.1651.

One-month 25 Delta Risk Reversal spikes

The chart above shows the risk reversal jumped to 3.40 on Monday from Friday’s reading of 0.25. The sharp rise represents increased demand for the EUR/USD call options (bullish sign) ahead of the German IFO due for release at 8:00 GMT.

German IFO: Slight deterioration in the sentiment expected

The Current Assessment index for July is seen coming-in at 123.8 vs. 124.1 in June. The Business Climate index is seen at 114.9 vs. 115.1 in June, while the Expectations index is seen cooling to 106.5 vs. 106.8.

The EUR/USD pair could scale higher to 1.17-1.1713 (Aug 2015 high) if the IFO indices beat estimates. On the other hand, a weaker-than-expected number could yield another pull back, which may be short lived as option traders are positioned (rise in risk reversal) for more gains in the EUR/USD pair.

EUR/USD outlook - Kathy Lien from BK Asset Management

“We believe new lows will be reached tomorrow if IFO surprises to the downside, at which point we'll be looking at 1.1550 for support”

EUR/USD Technicals

The 4-hour RSI is rising again with all major averages - 50-MA, 100-Ma, 200-MA sloping upwards. The 1-hour RSI has moved above 50.00 levels, while the spot has retaken the hourly 200-MA. There are no signs of stress on the daily chart as well, except for the overbought RSI… which could come into play if the German IFO numbers disappoint expectations.

EUR/USD Technical Levels

Resistance: 1.1685 (23.6% Fib R of 2008 high - 2017 low), 1.1713 (Aug 2015 high), 1.1794 (weekly 200-MA)

Support: 1.1620 (5-DMA), 1.1532 (1-hour 200-MA), 1.1463 (4-hour 100-MA)

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

EUR/USD stays in tight channel near 1.1800

EUR/USD moves sideways in a narrow band at around 1.1800 in the second half of the day on Friday as investors refrain from taking large positions. February inflation data from Germany and January Producer Price Index figures from the US could drive the pair's action heading into the weekend.

GBP/USD struggles below 1.3500 amid UK political drama, BoE easing bias

GBP/USD struggles to build on the overnight modest bounce from the weekly low and oscillates in a narrow band below 1.3500 on Friday. The Gorton and Denton by-election, held on February 26, has become a focal point of political drama in the UK, along with the BoE easing expectations, acting as a headwind for the GBP.

Gold flat lines below $5,200; traders look to US PPI for fresh impetus

Gold struggles to capitalize on its modest gains registered over the past two days and trades below the $5,200 mark through the first half of the European session on Friday. Geopolitical risks remain in play amid a large US naval and air power buildup in the Middle East.

Bitcoin, Ethereum and Ripple consolidate with short-term cautious bullish bias

Bitcoin, Ethereum and Ripple are consolidating near key technical areas on Friday, showing mild signs of stabilization after recent volatility. BTC holds above $67,000 despite mild losses so far this week, while ETH hovers around $2,000 after a rejection near its upper consolidation boundary.

Changing the game: International implications of recent tariff developments

The Supreme Court ruling on International Emergency Economic Powers Act (IEEPA) tariffs provides limited relief for the rest of the world, with weighted average tariff rates modestly lower.

Starknet unveils strkBTC, shielded Bitcoin transactions on Ethereum Layer 2

Starknet, the Ethereum Layer 2 network developed by StarkWare, today announced strkBTC, a wrapped Bitcoin asset that introduces optional shielding while preserving full DeFi composability.