German IFO preview: What to expect of EUR/USD?

EUR/USD once again ran into resistance near 1.0550 region and fell back towards fresh yearly lows reached in the Asian session at 1.0525. The major is last seen changing hands at 1.0537, recording a -0.11% loss on the day.

The immediate focus now remains on the German Ifo surveys, which are lined up for release at 0900GMT in the European session this Thursday.

Ifo business climate to remain unchanged in Nov

The headline Ifo Business Climate Index is expected to remain unchanged at 110.5 in Nov,. The Current Assessment sub-index is also seen unchanged at 115 this month, while the Ifo Expectations Index – indicating firms’ projections for the next six months – is expected to show a slight deterioration to 106.01 in Nov, as compared to October’s 106.1 reading.

The Surveys are expected to show no improvement in the business conditions in Germany, which is expected to keep the EUR/USD pair near fresh yearly lows on 1.05 handle. On a bearish surprise, the EUR/USD pair could drop below 1.05 barrier, while, the major could take-out daily high at 1.0556, should the data better expectations.

EUR/USD Technical Levels

Haresh Menghani, Analyst at FXStreet explains, “With the pair testing December 2015 lows support, short-term technical indicators have again moved back into oversold territory and thus, warrant consolidation or a technical bounce from current levels. Hence, recovery momentum beyond 1.0555 (session peak) level is likely to lift the pair towards a short-term descending trend-line resistance (orange line), currently near 1.0610-15 region. Although a follow through up-move seems unlikely, any further up-move might now be capped and should turn out to be short-lived.”

“On the flip side, 1.0520 area might continue to protect immediate downside below which the pair might turn vulnerable to extend the near-term downward trajectory. Below 1.0520 support, leading to a break through 1.0500 psychological mark, might now open room for a test of 1.0400 round figure mark, coinciding with a short-term descending trend-line support.” 

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