When is the IFO German Survey and how could it affect EUR/USD?
The German IFO Survey Overview
Germany’s IFO institute will publish its business survey for March on Wednesday at 09:00 GMT.
The headline IFO – Business Climate Index is forecast to fall to 86.1 in March from 88.6 in February.
The IFO – Current Assessment Index is expected to inch lower to 86.0, from 86.7 previously.
IFO – Expectations Index is projected to come at 86.0 in the reported month, against the previous reading of 90.5.
How could the German IFO Survey affect EUR/USD?
EUR/USD could stay subdued if Germany's IFO Business Survey data come as expected. The risk-sensitive pair struggles as the Euro (EUR) faces challenges amid ongoing uncertainty surrounding the United States (US)-Iran peace negotiations.
The US Dollar (USD) resilience reflects its safe-haven appeal amid persistent geopolitical uncertainty. Recent reports indicate that diplomatic efforts are gaining traction, with discussions centered around implementing a one-month ceasefire to create space for formal negotiations between Washington and Tehran. The Trump administration has reportedly presented Iran with a 15-point peace proposal aimed at ending hostilities in the Middle East. However, Iranian officials have publicly denied any formal breakthrough, though a senior source acknowledged that indirect communication channels have been active.
Technically, the EUR/USD is trading around 1.1600 at the time of writing. The 14-day Relative Strength Index (RSI) at 47 suggests neutral momentum. This indicates a lack of strong directional bias in the near term. The immediate support lies at the nine-day Exponential Moving Average (EMA) at 1.1578, while the initial resistance appears at the 50-day EMA of 1.1672.
German economy FAQs
The German economy has a significant impact on the Euro due to its status as the largest economy within the Eurozone. Germany's economic performance, its GDP, employment, and inflation, can greatly influence the overall stability and confidence in the Euro. As Germany's economy strengthens, it can bolster the Euro's value, while the opposite is true if it weakens. Overall, the German economy plays a crucial role in shaping the Euro's strength and perception in global markets.
Germany is the largest economy in the Eurozone and therefore an influential actor in the region. During the Eurozone sovereign debt crisis in 2009-12, Germany was pivotal in setting up various stability funds to bail out debtor countries. It took a leadership role in the implementation of the 'Fiscal Compact' following the crisis – a set of more stringent rules to manage member states’ finances and punish ‘debt sinners’. Germany spearheaded a culture of ‘Financial Stability’ and the German economic model has been widely used as a blueprint for economic growth by fellow Eurozone members.
Bunds are bonds issued by the German government. Like all bonds they pay holders a regular interest payment, or coupon, followed by the full value of the loan, or principal, at maturity. Because Germany has the largest economy in the Eurozone, Bunds are used as a benchmark for other European government bonds. Long-term Bunds are viewed as a solid, risk-free investment as they are backed by the full faith and credit of the German nation. For this reason they are treated as a safe-haven by investors – gaining in value in times of crisis, whilst falling during periods of prosperity.
German Bund Yields measure the annual return an investor can expect from holding German government bonds, or Bunds. Like other bonds, Bunds pay holders interest at regular intervals, called the ‘coupon’, followed by the full value of the bond at maturity. Whilst the coupon is fixed, the Yield varies as it takes into account changes in the bond's price, and it is therefore considered a more accurate reflection of return. A decline in the bund's price raises the coupon as a percentage of the loan, resulting in a higher Yield and vice versa for a rise. This explains why Bund Yields move inversely to prices.
The Bundesbank is the central bank of Germany. It plays a key role in implementing monetary policy within Germany, and central banks in the region more broadly. Its goal is price stability, or keeping inflation low and predictable. It is responsible for ensuring the smooth operation of payment systems in Germany and participates in the oversight of financial institutions. The Bundesbank has a reputation for being conservative, prioritizing the fight against inflation over economic growth. It has been influential in the setup and policy of the European Central Bank (ECB).
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