When is the German IFO Survey and how it could affect EUR/USD?
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.
Euro FAQs
The Euro is the currency for the 20 European Union countries that belong to the Eurozone. It is the second most heavily traded currency in the world behind the US Dollar. In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY (4%), EUR/GBP (3%) and EUR/AUD (2%).
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
Eurozone inflation data, measured by the Harmonized Index of Consumer Prices (HICP), is an important econometric for the Euro. If inflation rises more than expected, especially if above the ECB’s 2% target, it obliges the ECB to raise interest rates to bring it back under control. Relatively high interest rates compared to its counterparts will usually benefit the Euro, as it makes the region more attractive as a place for global investors to park their money.
Data releases gauge the health of the economy and can impact on the Euro. Indicators such as GDP, Manufacturing and Services PMIs, employment, and consumer sentiment surveys can all influence the direction of the single currency. A strong economy is good for the Euro. Not only does it attract more foreign investment but it may encourage the ECB to put up interest rates, which will directly strengthen the Euro. Otherwise, if economic data is weak, the Euro is likely to fall. Economic data for the four largest economies in the euro area (Germany, France, Italy and Spain) are especially significant, as they account for 75% of the Eurozone’s economy.
Another significant data release for the Euro is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought after exports then its currency will gain in value purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.