When are the German IFO surveys and how they could affect EUR/USD?

The German IFO Business Climate Overview

The German IFO surveys for April are lined up for release later today at 0800 GMT. The headline IFO Business Climate Index is expected to drop sharply to 102.7 in April. The Current Assessment sub-index is also seen lower at 106.0 this month, while the IFO Expectations Index – indicating firms’ projections for the next six months – is likely to ease further to 99.5 in the reported month.

Deviation impact on EUR/USD

Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 3 and 40 pips in deviations up to 2.4 to -3.2, although in some cases, if notable enough, a deviation can fuel movements of up to 60 pips.

 How could affect EUR/USD?

The spot could drop back to test the multi-month lows at 1.2185 on a bigger-than-expected drop in IFO figures while a test of 1.2245 (NY tops) cannot be ruled out on a positive surprise.

According to Jim Langlands at FX Charts, “the 4-hour momentum indicators looking heavy on Tuesday although the hourlies are turning a little higher and may need to do some correctional work to the topside, where 1.2215 will provide some minor resistance ahead of 1.2250 and the initial Fibo level, now at 1.2262. I doubt we see it above here today but if wrong look for a squeeze back towards the session high at 1.2288 and to 1.2300.”

“The 4-hour charts look heavy though and a sustained break of 1.2200 could then head towards Fibo/100 DMA support at 1.2170/75, below which would target 1.2085 and possibly 1.2025 although this remains over the horizon for now,” Jim adds.

However, the reaction to the data is likely to be short-lived, as the sentiment around the US dollar, as well as the Treasury yields price-action, will remain the main driver for the major.

Key Notes

Germany: IFO for April expected to reflect the weakness - TDS

Germany: Expect a further decline in IFO Survey – Nomura

About the German IFO Business Climate

This German business sentiment index released by the CESifo Group is closely watched as an early indicator of current conditions and business expectations in Germany. The Institute surveys more than 7,000 enterprises on their assessment of the business situation and their short-term planning. The positive economic growth anticipates bullish movements for the EUR, while a low reading is seen as negative (or bearish).