German IFO Business Climate Index unexpectedly drops to 87.6 in December vs. 88 prior

Akhtar Faruqui FXStreet

The German IFO Institute's Business Climate Index surprisingly comes lower at 87.6 in December from 88.0 in November, revised lower from 88.1. The data was expected to come in at 88.2

Other details of the publication showed that the IFO Current Assessment Index remains steady at 85.6 from 85.3, while the Expectations Index fell to 89.7 from the prior release of 90.5.

Market reaction

There has been no immediate impact of the German data on EUR/USD. The major currency is under pressure since opening and trades 0.25% lower to near 1.1715 as of writing.

Euro Price Today

The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the US Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.25%	0.71%	0.47%	0.13%	0.15%	0.16%	0.37%
EUR	-0.25%		0.45%	0.20%	-0.10%	-0.08%	-0.10%	0.11%
GBP	-0.71%	-0.45%		-0.23%	-0.56%	-0.55%	-0.54%	-0.33%
JPY	-0.47%	-0.20%	0.23%		-0.32%	-0.30%	-0.31%	-0.09%
CAD	-0.13%	0.10%	0.56%	0.32%		0.01%	0.00%	0.23%
AUD	-0.15%	0.08%	0.55%	0.30%	-0.01%		0.00%	0.21%
NZD	-0.16%	0.10%	0.54%	0.31%	-0.01%	-0.01%		0.21%
CHF	-0.37%	-0.11%	0.33%	0.09%	-0.23%	-0.21%	-0.21%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).

This section was published at 06:30 GMT as a preview of the German IFO Survey

The German IFO Survey Overview

Germany’s IFO institute will publish its business survey for December on Wednesday at 09:00 GMT.

The headline IFO Business Climate Index is expected to tick higher to 88.2 this month, from a 88.1 reading in November.

The Current Assessment Index is forecast to edge up to 85.7 in December from 85.6, while the Expectations Index is seen easing to 90.5 from 90.6.

How could the German IFO Survey affect EUR/USD?

EUR/USD may limit its downside if the IFO Business Survey data comes out as expected. The Euro may gain if data comes stronger-than-expected, which could reinforce cautious sentiment after European Central Bank (ECB) officials signaled cuts may not be needed in 2026. Traders will likely observe the Eurozone Core Harmonized Index of Consumer Prices (HICP) data later in the day.

The EUR/USD pair may remain subdued as the US Dollar (USD) rises after mixed US labor market data for November did little to reinforce expectations of additional Federal Reserve rate cuts. The CME FedWatch tool suggests that Fed funds futures are pricing an implied 75.6% chance of a hold in rates at the US central bank's next meeting in January, up from nearly 74% a week ago.

Technically, the EUR/USD trades lower around 1.1710 at the time of writing. However, the bullish bias prevails as the pair remains within the ascending channel pattern. Additionally, the 14-day Relative Strength Index (RSI) is positioned above the 50 level, strengthening the bullish bias. The pair may approach the 12-month high of 1.1804, reached on December 16. On the downside, the immediate support lies at the nine-day Exponential Moving Average (EMA) of 1.1702, aligned with the psychological level of 1.1700. Further declines would lead the pair to test the 50-day EMA at 1.1636.

(This story was corrected at 09:25 GMT to say in the title that German IFO Business Climate Index unexpectedly drops to 87.6 in December vs. 88 prior, and not in November)

Economic Indicator

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).

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