The euro is slightly lower on Wednesday. In the European session, EUR/USD is trading at 1.0685, down 0.16%.
German shows signs of optimism
Germany’s Ifo Business Climate index rose to 89.4 in April, up from a revised 87.9 in March and above the market estimate of 88.9. The index is still in negative territory (100 separates pessimism from optimism) but there are signs of optimism that the eurozone’s largest economy may have bottomed out.
The reading marked a third straight increase, which in the past has indicated that the German economy has turned a corner.
Business confidence is now at its highest level since May 2023, boosted by falling inflation and the expectation that the European Central Bank will soon cut interest rates. The German economy is by no means out of the woods yet but the improvement in business confidence is an encouraging sign.
Eurozone PMIs – Services up, manufacturing down
Eurozone and German PMIs for April painted a mixed picture of economic activity, with services improving while manufacturing took a step backwards. The eurozone services PMI improved to 52.9, up from 51.5 in March and above the market estimate of 51.8. The manufacturing PMI fell from 46.1 to 45.6, shy of the market estimate of 46.5.
The German services PMI showed a return to growth after eight straight declines, climbing from 49.8 to 53.3, above the market estimate of 50.6. This is another sign of improvement in the German economy, although manufacturing remains mired in contraction.
Will ECB deliver a series of cuts?
The ECB has signaled that it will start to lower interest rates in June but what happens afterwards is less clear. ECB President Lagarde hasn’t stated what the central bank has planned after June. Some Governing Council members have been more upfront and said they support further cuts before the end of the year. Some members have said they are comfortable with three rate cuts this year but the markets aren’t sure that the ECB will be that aggressive and are no longer fully pricing in three rate cuts this year.
EUR/USD technical
-
There is resistance at 1.0729 and 1.0757
-
EUR/USD is testing support at 1.0684. Below, there is support at 1.0656
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.
Recommended Content
Editors’ Picks
EUR/USD extends recovery beyond 1.0400 amid Wall Street's turnaround
EUR/USD extends its recovery beyond 1.0400, helped by the better performance of Wall Street and softer-than-anticipated United States PCE inflation. Profit-taking ahead of the winter holidays also takes its toll.
GBP/USD nears 1.2600 on renewed USD weakness
GBP/USD extends its rebound from multi-month lows and approaches 1.2600. The US Dollar stays on the back foot after softer-than-expected PCE inflation data, helping the pair edge higher. Nevertheless, GBP/USD remains on track to end the week in negative territory.
Gold rises above $2,620 as US yields edge lower
Gold extends its daily rebound and trades above $2,620 on Friday. The benchmark 10-year US Treasury bond yield declines toward 4.5% following the PCE inflation data for November, helping XAU/USD stretch higher in the American session.
Bitcoin crashes to $96,000, altcoins bleed: Top trades for sidelined buyers
Bitcoin (BTC) slipped under the $100,000 milestone and touched the $96,000 level briefly on Friday, a sharp decline that has also hit hard prices of other altcoins and particularly meme coins.
Bank of England stays on hold, but a dovish front is building
Bank of England rates were maintained at 4.75% today, in line with expectations. However, the 6-3 vote split sent a moderately dovish signal to markets, prompting some dovish repricing and a weaker pound. We remain more dovish than market pricing for 2025.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.