EURUSD Price Analysis: Euro Rallies on Upbeat German Ifo Data

The EURUSD currency pair was trading up for the day at the time of writing as analysts warned that the euro’s rally, which started in October, had run out of steam. 

Many analysts and investors are debating whether the euro peaked after recently hitting a 6-month high. Only time will tell us whether the single currency has finally peaked as the region faces a harsh winter. 

Last week, the Federal Reserve and the European Central Bank both hiked their lending rates and promised to keep raising rates into the foreseeable future. Still, investors seem to have believed the Fed more than the ECB. 

The ECB is lagging far behind the Fed, with the latest 50 basis point rate hiking bringing its lending rate to 2.50%, while the Fed’s lending rate sits at 4.50%. Furthermore, US inflation has shown signs of easing, while eurozone inflation remains high. 

Today’s euro rally was also boosted by the upbeat German Ifo business climate indicator, which came in at 88.6, beating analysts' consensus estimates of 87.6. The positive print indicates that investors are optimistic about Germany’s economic prospects.

The EURUSD price chart below shows that the currency pair remains uptrend and could challenge the resistance level at 1.07741. There’s more room for gains, and we could easily see the price break above this crucial level.  

Investors and traders will look forward to the German GfK consumer confidence report due for release on Wednesday. A positive print would indicate that consumers and investors have confidence in the country’s economy, which should bode well for the euro, given Germany’s status as the EU’s largest economy. 

The pair’s performance will also be affected by the US dollar’s performance, and we could see the pair fall as the dollar rallies. 

*This is not investment advice. 

The EURUSD price chart.

The EURUSD currency pair was trading up 23.5 pips (0.22%) at writing as the euro rallied against the dollar.