EUR/USD clinches highs near 1.1240 on upbeat IFO

The buying interest around the common currency has picked up in the wake of the release of the German IFO, lifting EUR/USD to the 1.1240/45 band, fresh session tops.

EUR/USD bolstered by IFO

Spot met extra buying pressure after the German IFO has surprised markets to the upside today.

In fact, Business Climate, Current Assessment and Expectations have all surpassed initial estimates for the current month, giving extra oxygen to the pair’s daily upside to the 1.1240 region.

In the meantime, spot remains locked within a narrow range amidst the resurgence of the risk-off trade, with volatility tracked by VIX picking up further pace and the main European stock markets deepening into the red territory.

Later in the session, ECB’s M.Draghi is due to speak at the Quarterly Hearing before the Committee on Economic and Monetary Affairs of the European Parliament, followed by speeches by board members Y.Mersch, I.Angeloni and B.Coeure.

On the US data front, New Home Sales and the Dallas Fed manufacturing gauge are due along with speeches by N.Kashkari (2017 voter, neutral?), D.Tarullo (voter, dovish) and R.Kaplan (2017 voter, neutral?).

In view of Carol Harmer, Founder of Charmer Trading Academy, “Between  1.1210 and 1.1180 is the level to watch this morning.....We need to stay above 1.1180 to negate any downside moves for this currency.....We have not yet turned negative on the daily charts,  and are still pointing higher......However as I have said previously the weekly outlook isn't looking that great with this large base pattern that has formed over the past 2 years”.

EUR/USD levels to watch

The pair is now up 0.10% at 1.1238 and a break above 1.1258 (high Sep.22) would aim for 1.1272 (resistance line off 2016 high) and finally 1.1329 (high Sep.8). On the flip side, the immediate support lines up at 1.1119 (low Sep.21) followed by 1.1043 (low Aug.5) and then 1.0950 (low Jul.25).