EUR/USD Likely Break Below Key Support If US Durable Goods Orders Continue to Grow

Eurozone – German Ifo Business Climate Index

On Wednesday, at GMT 8:00 a.m., the Ifo Institute for Economic Research will publish this month’s German Business Climate index. The Ifo Business Climate figure measures the level of a composite index, which is created by surveying around 7,000 businesses in Germany by asking them to rate the comparative business conditions of now and in six months.

Since the survey has a large sample size compared to similar studies, binary options investors consider the Ifo Business Climate to be a strong leading indicator of the overall economic optimism in the country.

Last month, the German Ifo Business Climate index came out at 115.2, and this month, the forecast was set slightly higher, at 115.3.

United States – Core Durable Goods Orders

Later, at GMT 12:30 p.m., the US Census Bureau will release the month-over-month core durable goods orders figure, which measures the changes in the total value of all new purchase orders made to the US manufacturers for durable goods over the past month. However, the US Census Bureau excludes goods from the transportation sector in this figure in order to offer an accurate picture.

Binary options traders consider the US core durable goods orders to be the primary gauge of production situation in the economy, as an increase in purchase orders indicates that US manufacturing activity and growth will happen in the near future.

Last month, the US core durable goods orders decreased by 0.5% and the forecast for this month is currently set at an increase of 0.5% as well.

EUR/USD Forecast

Since breaking below the uptrend line on September 25, the EUR/USD remained mostly range bound and found support near the 1.1685 level. Although the price penetrated below this support level October 6, so far, it has failed to close below this level.

As the German Ifo Business Climate Index reading is estimated to come very close to last month’s reading, but the US core durable goods orders figure is expected to increase by an additional 0.5%, we believe it would set a bearish fundamental outlook for the EUR/USD this week. Therefore, if the EUR/USD closes below the support near 1.1685, it would likely attract additional bearish momentum in the market.

Hence, US binary options traders should look out for trading opportunities below this major resistance level around 1.1685.

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