Will the market take a wait-and-see approach to the euro’s movements following the decline in the Ifo Business Climate Index?

Will the market take a wait-and-see approach to the euro’s movements following the decline in the Ifo Business Climate Index?

19.12.2023

In the U.S. currency market the previous day, the Canadian dollar, another U.S. currency, rebounded against the U.S. dollar. The USD/CAD pair rebounded from 1.3349 to 1.3409.This prevented a fourth consecutive day of losses. On the daily chart, USD/CAD has touched the -3σ level of the Bollinger Bands, and the daily RSI has fallen below the oversold threshold of 30 to 26. Therefore, we need to carefully assess whether the US dollar’s rebound will continue during US trading hours.

European currencies saw the euro rise slightly against the U.S. dollar, despite the German IFO Business Climate Index for December—released yesterday—deteriorating to 86.4 from 87.3 the previous month.The EUR/USD pair rebounded from 1.0890 to 1.0930, breaking above the 20-period moving average (MA) on the hourly chart. On the 4-hour chart, the 20-period MA is acting as a support level, and prices have continued to rise during today’s Asian trading session. We will closely monitor whether the EUR/USD pair continues to rebound during European trading hours.

Today’s schedule includes a press conference by Bank of Japan Governor Ueda at 15:30, Switzerland’s trade balance at 16:00, Hong Kong’s employment statistics at 17:30, the Eurozone’s consumer price index at 19:00, Hungary’s policy interest rate at 20:00,at 22:00, remarks by BOE Deputy Governor Breeden; at 22:30, U.S. housing starts, Canadian industrial product prices, and the Canadian Consumer Price Index; at 23:30, remarks by U.S. Federal Reserve’s Barkin:Richmond Fed President, at 26:30, remarks by U.S. Atlanta Fed President Bostic, and at 28:00, remarks by New Zealand RBNZ Governor O’Hara. I intend to carefully monitor the euro’s movements following the deterioration in the Ifo Business Climate Index.