Euro Slips as German Data Disappoints

The Euro held steady and close to a 2-week trough against the U.S. Dollar during the Asian trading session after unexpectedly dismal economic news from Germany, the Eurozone’s key economic driver, fueled speculation that the European Central Bank will follow through on their promise to cut interest rates. Markets will focus on today’s release of the German IFO report which provides an indication of business morale in Germany. A consensus of experts is predicting a drop in each of the three readings for business climate (106.2 from 106.7), current assessment (109.5 from 109.9) and expectations (103.0 from 103.6); a fall beyond expectations is likely to put renewed pressure on the Euro.

As reported at 11:38 a.m. (JST) in Tokyo, the EUR/USD pair was trading at $1.2973, a loss of 0.5% in the overnight hours, and about 1.5% from striking last week’s high of $1.3200. Currency analysts say that they are looking at possible buying opportunities if the Euro drops to the $1.2750 to $1.2800 level, but in the longer term expect to see a Euro bounce as the feeling is that the ECB won’t respond with aggressive action. The EUR/JPY pair was trading earlier at a session low of 127.86 Yen before reversing direction to 129.25 Yen.