Will the Euro/Dollar Pair Test the 1.17 Level as German Economic Sentiment Improves?

Will the Euro/Dollar Pair Test the 1.17 Level as German Economic Sentiment Improves?

26.08.2026 New

In the U.S. currency market the previous day, weak U.S. economic indicators weighed on the dollar. U.S. new home sales in July came in at an annualized rate of 607,000, falling short of the market forecast of 620,000 and marking a 10.5% decline from the previous month.The U.S. August consumer confidence index also came in at 89.4, below market expectations and the previously revised figure of 90.2.Meanwhile, the U.S. dollar held up well against the yen, with the USD/JPY pair trading within a range of approximately 0.48 yen, between 159.01 and 159.49 yen, and closing near 159.23 yen.While the 159.50 yen level is viewed as resistance, we will need to assess whether the 159.00 yen level will act as support.

In European currency markets, the euro rose against the U.S. dollar on the back of improved business sentiment in Germany. Germany’s August Ifo Business Climate Index came in at 88.8, exceeding market expectations of 87.2 and the previously revised figure of 86.7.Germany’s revised GDP for the April–June quarter also came in at 0.3% quarter-on-quarter, an upward revision from the preliminary estimate of 0.2%. The euro traded against the dollar within a range of approximately 28 pips, between $1.1651 and $1.1679, and closed near $1.1674.While the area from $1.1680 to the key level near $1.1700 is seen as resistance, the focus is likely to be on whether the pair can hold above the $1.1650 level.

In today’s economic data, Australia’s July Consumer Price Index, released at 10:30, came in at 3.5% year-over-year, exceeding market expectations of 3.3%.Later today at 9:30 p.m., the U.S. July PCE Deflator, the revised U.S. GDP for the April–June quarter, U.S. July personal income and personal consumption expenditures, and U.S. July durable goods orders are scheduled to be released.The PCE Deflator is expected to come in at 3.6% year-over-year, with the core index at 0.2% month-over-month and 3.3% year-over-year; the revised GDP figure is forecast at an annualized 1.5% quarter-over-quarter. We will be watching closely to see how these inflation and growth figures impact the direction of U.S. interest rates and the U.S. dollar.