Will the market wait and see how much further the euro can rise, given the strong German IFO Business Climate Index?

Will the market wait and see how much further the euro can rise, given the strong German IFO Business Climate Index?

25.04.2023

In yesterday’s U.S. trading session, the U.S. dollar fell despite the March Chicago Fed National Activity Index—released yesterday—coming in at -0.19, slightly better than the market forecast of -0.2. The EUR/USD pair rose by approximately 80 pips from 1.0966 to 1.1049. It has continued to climb to 1.1066 during today’s Asian trading session.On the daily chart, no RSI divergence has emerged, and the uptrend along the 20-day moving average continues; therefore, we should remain vigilant for a potential weakening of the U.S. dollar during European trading hours.

European currencies rose against the yen after Germany’s April IFO Business Climate Index, released yesterday, came in at 93.6, surpassing both the previous reading and market expectations.EUR/JPY rose by just under 150 pips, from 147.121 to 148.617. On the daily chart, it is in a strong uptrend, supported by the 10-day moving average. Since EUR/JPY has already broken above last year’s high of 148.364 and set a new high for the year, we will be watching for further gains during U.S. trading hours.

Today, the Swiss trade balance will be released at 3:00 PM Asia time, followed by remarks from Bank of England Deputy Governor Broadbent at 6:00 PM Europe time, and the CBI Business Survey at 7:00 PM Europe time.CBI Business Survey, at 22:00 the US S&P/Case-Shiller Home Price Index, at 23:00 US time the US Consumer Confidence Index, US New Home Sales, and the US Richmond Fed Manufacturing Index, at 26:00 the US 2-year Treasury auction, and at 7:45 the following day New Zealand’s trade balance.We will cautiously monitor the upside potential of the euro, which has been rising on the back of a strong German IFO Business Climate Index.