- Euro traded higher and broke a major bearish trend line on the hourly chart.
- EURAUD is facing sellers near the 50 hourly simple moving average, which is acting as a hurdle.
- German business sentiment index released by the CESifo Group posted a decline from the last reading of 108.6 (revised) to 107.3 in January 2016.
- German IFO Expectations also missed the mark, and posted a decline from the last reading of 104.6 to 102.4.
The EURAUD pair after trading as low as 1.5340 managed to gain traction and traded higher. There was a bearish trend line on the hourly chart, which was cleared by buyers to open the doors for more gains in the short term.
The EURAUD pair is currently trading near the 50 hourly simple moving average, which is stalling gains. A break above it could take the pair towards 100 MA.
On the downside, the broken trend line may act as a support if the pair corrects lower.
German IFO Business Climate Index
Today, the German IFO Expectations, which is closely watched as an early indicator of current conditions and business expectations for the next six months, where firms rate the future outlook as better, same, or worse was released by the CESifo Group. The forecast was lined up for a decrease from the last reading of 108.7 to 108.4 in Jan 2016. However, the outcome missed the mark, as the index dropped to 107.3, and the last reading was also revised down from 108.7 to 108.6.
The report added that the “Competitiveness has fluctuated significantly over the past two months. In November it improved sharply and in December it deteriorated again. These movements can be explained by developments in the euro/US dollar exchange rate”.
The EURAUD pair may trade higher in the short term, but if the sentiment changes due to the economic releases, then we may witness a downside reaction.