Sample Category Title

Germany’s Ifo Business Climate Index was unchanged at 85.2 in February, falling short of expectations for a rise to 85.8. The data reflects that businesses are still "skeptical" about the outlook, "waiting to see how things develop", according to the Ifo Institute.

Current Assessment Index dropped from 86.0 to 85.0, missing the forecasted 86.5. However, Expectations Index showed slight improvement, rising from 84.3 to 85.4, exceeding the consensus of 85.2.

Sector-wise, the manufacturing index improved from -24.8 to -22.1, and trade sentiment rebounded from -29.5 to -26.2. The construction sector also saw a marginal improvement, rising from -28.1 to -27.6. However, services weakened, falling from -2.2 to -4.3.

Full German Ifo release here.

The EUR/USD chart shows the euro rising above its previous February peak of 1.05155, set on the 14th.

On one hand, the euro's strength is driven by Germany’s national elections over the weekend, where the opposition conservatives, led by Friedrich Merz, secured victory as expected. Investors are now focused on how quickly Merz’s party can form a coalition government to implement much-needed economic reforms.

On the other hand, the US dollar index has fallen to its lowest level since mid-December.

According to Reuters, the dollar’s weakness is influenced by:

→ Shifting market perceptions of its value amid Trump’s tariff policies in global trade.

→ Declining US Treasury yields due to expectations of further Fed rate cuts in 2025.

Technical Analysis of EUR/USD Chart

Price movements form an upward channel (marked in blue), but the red arrow highlights bearish activity near resistance levels at:

→ The yearly high around 1.05333.

→ The median line of the channel.

Given the lower liquidity at the start of trading, the initial breakout above the psychological 1.05000 level may have been false. Potential bearish pressure could push EUR/USD towards a support zone, including:

→ The 1.0400 level.

→ The lower boundary of a broader channel (marked in orange).

If bulls intend to maintain their February momentum, signs of buying activity may emerge near the lower boundary of the blue channel.

Trade over 50 forex markets 24 hours a day with FXOpen. Take advantage of low commissions, deep liquidity, and spreads from 0.0 pips. Open your FXOpen account now or learn more about trading forex with FXOpen.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

AUD/USD is attempting a fresh increase from the 0.6350 support. NZD/USD is also rising and could aim for a move above the 0.5800 resistance.

Important Takeaways for AUD/USD and NZD/USD Analysis Today

• The Aussie Dollar found support at 0.6300 and recovered higher against the US Dollar.
•  There is a connecting bullish trend line forming with support at 0.6365 on the hourly chart of AUD/USD at FXOpen.
• NZD/USD is consolidating above the 0.5720 support.
• There is a key bullish trend line forming with support at 0.5735 on the hourly chart of NZD/USD at FXOpen.

AUD/USD Technical Analysis

On the hourly chart of AUD/USD at FXOpen, the pair formed a base above 0.6300. The Aussie Dollar started a decent increase above the 0.6350 resistance against the US Dollar, as mentioned in the previous analysis.

The pair even cleared 0.6400 before there was a minor pullback. The recent low was formed at 0.6351 and the pair is again rising. The bulls pushed the pair above the 50% Fib retracement level of the downward move from the 0.6408 swing high to the 0.6351 low.

However, the pair is still below the 50-hour simple moving average. On the upside, the AUD/USD chart indicates that the pair is now facing resistance near the 0.6385 zone. It is close to the 61.8% Fib retracement level of the downward move from the 0.6408 swing high to the 0.6351 low.

The first major resistance might be 0.6395. An upside break above the 0.6395 resistance might send the pair further higher. The next major resistance is near the 0.6410 level. Any more gains could clear the path for a move toward the 0.6450 resistance zone.

If not, the pair might correct lower. Immediate support sits near the 0.6365 level. There is also a connecting bullish trend line forming with support at 0.6365.

The next support could be 0.6350. If there is a downside break below the 0.6350 support, the pair could extend its decline toward the 0.6330 zone. Any more losses might signal a move toward 0.6300.

NZD/USD Technical Analysis

On the hourly chart of NZD/USD on FXOpen, the pair also followed AUD/USD. The New Zealand Dollar formed a base above the 0.5675 level and started a decent increase against the US Dollar.

The pair climbed above the 0.5720 resistance. It tested the 0.5775 resistance before there was a pullback. The recent low was formed at 0.5734 and the pair is again rising above the 50-hour simple moving average.

It cleared the 0.5750 resistance and the 50% Fib retracement level of the downward move from the 0.5772 swing high to the 0.5734 low. The NZD/USD chart suggests that the RSI is back above 50 signaling a positive bias.

On the upside, the pair is facing resistance near the 76.4% Fib retracement level of the downward move from the 0.5772 swing high to the 0.5734 low at 0.5762. The next major resistance is near the 0.5775 level.

A clear move above the 0.5775 level might even push the pair toward the 0.5800 level. Any more gains might clear the path for a move toward the 0.5880 resistance zone in the coming days.

On the downside, there is a support forming near the 0.5750 zone. If there is a downside break below the 0.5750 support, the pair might slide toward 0.5735. There is also a key bullish trend line forming with support at 0.5735. Any more losses could lead NZD/USD in a bearish zone to 0.5695.

Trade over 50 forex markets 24 hours a day with FXOpen. Take advantage of low commissions, deep liquidity, and spreads from 0.0 pips. Open your FXOpen account now or learn more about trading forex with FXOpen.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Markets

US stock markets suffered a late swoon last Friday. They started on a bad footing, loosing around 0.5% in the first trading hour with disappointing US eco data triggering an orderly correction. The February US composite PMI unexpectedly fell to its lowest level since March 2023 (50.4) from 52.7 in January (vs 53.2 expected). The first sub-50 reading in the services sector since January 2023 was accountable for the setback. Details showed a darkening picture of stalling business activity, heightened uncertainty, pessimism on the outloook and rising prices. The latter also featured in European and UK PMI’s released earlier on the day and also showed up in a significant upward revision to long term (5-10y) US inflation expectations in the Michigan consumer survey (3.5% from 3.3%, highest since early ‘90s). The first print of that February survey already pointed at elevated short term inflation expectations (4.3% from 3.3%).

The mood on US stock markets soured after European close with key indices ending 1.7% (Dow) to 2.2% (Nasdaq) lower. An article in the South China Morning Post spooked investors going into the weekend. A Chinese team found a new bat coronavirus that could infect humans the same way as Covid-19. Safe haven flows ignited a rally in US Treasuries into the close with daily yield losses of around 7 bps across the curve. The US dollar got stock in between the risk climate and the loss of interest rate support with EUR/USD ending the week at 1.0458.

The German CDU/CSU won parliamentary elections yesterday, receiving 28.52% of the vote share (+4.38%pts). The liberal FDP (4.33%) and far-left Sahra Wagenknecht Alliance (4.97%) fail to make the 5% threshold to enter parliament, opening the way for a grand coalition between the CDU/CSU and Social Democrats (16.41%; -9.29%pts). That’s the most market-friendly election outcome. European stock futures are up this morning with EUR/USD approaching first resistance at 1.0533 (YTD top). German Bunds lose ground. Should BSW in final counting manage to get over 5%, the Greens (11.61%; -3.11%pts) come into play, toughening the coalition process and weakening the government. Extreme left (Die Linke 8.77% + BSW) and extreme right (AfD 20.80%) together gather over a third of votes. Voter turnout was high at 84%. News on a March 6 emergency EU Defense Summit this morning also boosts sentiment. Belgian central bank governor Wunsch warned in the FT that the eurozone risks sleepwalking into too many rate cuts. He’s not (yet) pleading for a pause in April, but the option should be kept open. ECB Schnabel was the first to hint in that direction last week. Wunsch thinks that downside and upside inflation risks are relatively limited this year. Towards year-end, he felt relatively comfortable of market expectations of a 2% ECB policy rate.

News & Views

The European Union estimated that Trump’s first salvo of tariffs that impacts the bloc may be a hit of as much as EUR28bn of its exports. The US president has announced a 25% import levy on steel and aluminum that could take effect as soon as March 12, including in finished products and with no exceptions. Trump also vowed to slap reciprocal tariffs based on trade policies by US partners. The impact is fourfold the hit in 2018, when the US introduced 25% tariffs on selected steel goods and 10% on aluminum. The EU’s response back then was suspended after Biden came to power and the two sides reached an agreement but said it could quickly reactive them if needed.

US Treasury Secretary Bessent in an op-ed for the Financial Times explained in more detail the deal US president Trump is seeking with Ukraine in developing its natural resources and minerals. He is responding to what he is saying is a misrepresentation or just plain wrong information. “The US would not be taking ownership of physical assets in Ukraine. Nor would it be saddling Ukraine with more debt.”, Bessent said. Instead the “terms of our partnership propose that revenue received by the government of Ukraine from natural resources, infrastructure and other assets is allocated to a fund focused on the long-term reconstruction and development of Ukraine where the US will have economic and governance rights in those future investments.” The Treasury Secretary says such a structure brings the necessary transparency, accountability, corporate governance and legal framework and leaves no room for corruption and insider deals. The agreement is still in draft form and negotiations continued during the weekend.

The euro and the European equity futures are in the green this Monday morning on relief that the German elections didn’t bring major surprises. Merz’ CDU/CSU won the election with around 28.5% of the votes – a good result for the center right though slightly weaker-than-expected, Olaf Scholz’ SPD gained around 16% of support – as expected, while the AfD amassed 20% of the votes. The kneejerk reaction is a swift rebound of the euro and the equity futures on hope of higher spending by the new German government would tackle the economic weakness of past years. The EURUSD jumped past the 1.05 in the early hours of trading in Asia and could see a continued support above this psychological mark, the German DAX futures jumped more than 1% and the Eurostoxx futures are also positive at the time of writing. Trend and momentum indicators are positive for the European stocks that have been performing beautifully since the start of this year on the convergence trade, also supported by encouraging earnings, a more supportive European Central Bank (ECB) stance than the Federal Reserve’s (Fed) and also on thinking that the global easing in financial conditions would benefit to the European cyclical stocks. But the RSI indicator remain near the overbought territory, warning that it could soon be time for a minor downside correction – which could be an interesting dip buying opportunity for European stock investors as the rising geopolitical tensions with the other side of the Atlantic Ocean is expected to further boost the ECB support and the defensebudgets.

Across the Atlantic, things were looking pretty bad last Friday. The US stocks were hit by an ugly selloff on weaker-than-expected economic data and exploding inflation expectations. In fact, the US 5-10 year consumer inflation expectations hit the 3.5% mark – the highest since 1995 – on prospects of massive tariffs from Trump government and worsening trade relations with the rest of the world. More than half of the surveyed also think that unemployment will rise over the next year. This being said, it’s good to note that the spike in bad expectations was almost fully driven by respondents that qualify themselves as Democrats. But hey, the facts are the facts and massive tariffs, mass firings and plans of mass deportation will certainly have an impact. As such, the sight of softer-than-expected economic data and the spike in inflation expectations – that are dangerous because they tend to be self-fulfilling – sent the US indices severely lower on Friday. The S&P500 tanked 1.71%, Nasdaq 100 dropped more than 2% while the Dow Jones index fell 1.69%, as well. Small and mid-cap indices were hit heavier: the S&P400 for example tanked nearly 2.40% and is down by almost 10% since the November peak while the small caps tumbled nearly 3% and are down by more than 10% since the November peak – meaning that they are now in the correction territory – as the Trump optimism is being eaten by the tariffs and explodes costs (and cost expectations) to an extent that small businesses could hardly afford. And the Fed is no longer looking like it could continue to lower interest rates as inflation expectations are exploding. So yes, the aggressiveness of Trump’s America First policies could backfire.

This week, the US will release its latest GDP and PCE updates. The US GDP is expected to have grown 2.3% in Q4, down from 3.1% printed earlier. Sales will likely remain strong for now, while the PCE index – the Fed’s favourite gauge of inflation due Friday – could print an uptick and further temper the Fed rate cut expectations. Interestingly however, the uptick in inflation expectations that triggered a sizeable selloff in US equities last Friday couldn’t give a sustainable support to the US dollar. The US dollar gained on Friday but is pulled to the lowest levels since December this morning in Asia. The improved euro appetite and the sharp gains in the Japanese yen on expectation that the Bank of Japan (BoJ) would continue hiking rates are weighing on the dollar appetite along with the trade worries. I also believe that the positive correlation between the rising geopolitical tensions and the dollar purchases is reversing for good as investors outside the US realize that pushing the US dollar higher would only make America stronger to hit the others stronger. The US dollar index slipped below the 100-DMA and is about to test an important Fibonacci level, the 106 major retracement on September to January Trump rally. A move below this level will force the index into the medium-term bearish consolidation zone and pave the way for further weakness.

In energy, crude oil cleared the 100-DMA support without much pain and tumbled more than 3% on Friday. The global trade uncertainties and Trump’s ‘drill baby drill’ policies continue to weigh heavier than the geopolitical uncertainties in oil prices. Support is seen near the $70pb this morning but risks remain tilted to the downside. The upside potential looks limited into the $72.50/73.15 area that shelters the minor 23.6% Fibonacci retracement on the January to February pullback and the 50-DMA.

In focus today

Today, focus turns to the final inflation release for the euro area in January. The final print will allow us to digest the increase in January, which was likely driven by many one-off factors.

In Germany, we receive the Ifo index for February. It will be interesting to see if it mirrors the PMI data on Friday, which saw a marginal uptick in the composite measure - mainly attributed to an increase in the weak manufacturing sector.

The focus for the rest of the week will be on country CPIs for February from Germany, Spain, and Italy. Keeping an eye on Europe, we also get euro negotiated wages and credit growth. In the US, the Fed's preferred measure of inflation, the PCE, is due for release on Friday, while we continue to closely monitor any tariff announcement from the Trump administration and any news on the geopolitical front.

Economic and market news

What happened since Friday

The German election makes a two-party government between the conservative CDU/CSU and the Social Democrats (SPD) the most likely result, which is a positive outcome for the German economy. Markets have also reacted positively to the news by strengthening the euro by 0.6% during Asian trading hours while DAX futures have climbed 1.1%. The conservative chancellor Friedrich Merz is almost certain to become the next chancellor as his party emerged as the biggest one with 28.6% of the votes. A majority government with the Social Democrats is possible because two parties fell below the 5% threshold for entering the parliament, namely the FDP at 4.33% and the BSW at 4.97%. This gives 328 seats to the CDU/CSU and SPD, above the 315 needed for a majority. A two-party "Grand coalition" government is a positive outcome because decision making is easier than in a three-party government. Negotiations to form the government will likely take one to two months.

We see a 70% probability for a reform of the "debt brake" to allow more borrowing in German given the results. In terms of defence spending and support for Ukraine, the election outcome was not the best scenario because the far-right (Afd) and the Left party combined secured 34.3% of the votes. Therefore, they will be able to block off-budget defence funds and legislation that requires two-thirds majority. Yet, with a less fragmented Parliament and a likely two-party government Germany's presence in the EU will likely be stronger compared to the previous government, which is positive news. For more details, please see Flash: German election - A positive outcome for markets and the economy, 24 February.

Friday was all about February PMIs, with releases across most major economies. In the euro area, the composite PMI was lower than expected at 50.2 (cons: 50.5), mainly attributed to the services sector PMI declining to 50.7 (cons: 51.5), while the manufacturing measure ticked up to 47.3 (cons: 47.0). The services PMI was dragged down by a very large decline in the French services sector, while Southern Europe saw rising PMIs. Looking ahead, we expect the manufacturing sector to gradually improve, climbing back above 50 at the end of 2025, spurred by lower interest rates.

In the UK, the overall report was slightly on the weak side, with manufacturing lower than expected at 46.4 (cons: 48.5) while services printed stronger than anticipated at 51.1 (cons: 50.8) - leaving the composite little changed at 50.5 (cons: 50.6). UK retail sales for January was also announced, which was stronger than expected with retail sales ex auto fuel rising 1.2% y/y (cons: 0.6%, prior; 2.1%). The topside surprise was due to a rise in sales from food stores and online retail, but the December figures were downwardly revised across the board, limiting the overall surprise.

In the US, the PMI reading was similar to the European print, as the manufacturing index continued improving to 51.6 from 51.2 (cons: 51.5), while the services measure declined to 49.7 from 52.9 (cons: 53), the weakest figure since January 2023. Thus, the composite measure was barely above the neutral level at 50.4 (prior: 52.7). Looking at details, the services output prices index fell to the lowest level since May 2020 and below its pre-covid average, while employment indices declined across both manufacturing and employment. On a more positive note, manufacturing price indices and order-inventory balances continued to rise. Overall, we see the print as clearly dovish in light of the Fed's stance.

The final release of the inflation expectations from the University of Michigan for January showed that 1y expectations were unchanged from the flash estimate at 4.3%, while the 5y measure was revised higher to 3.5% from 3.3% - the highest level since April 1995. Importantly, different inflation indicators are yielding mixed signals at the moment.

In geopolitics, Ukrainian President Zelenskyy stated for the first time that he is willing to step down his presidency to secure Ukraine a NATO membership or achieve long-lasting peace. The remark comes after the recent weeks of focus on striking a ceasefire deal, with the US holding bilateral talks with Russia in Saudi Arabia. Zelenskyy also rejected the Trump administration's demands for a significant share of the proceeds from extracting Ukrainian mineral deposits. We will be hosting a webinar on 27 February from 09.30-10.00 shedding light on the possible outcomes and economic implications if a ceasefire is reached.

Equities: What looked like a rebound day for equities turned sour at the US opening bell. Global equities closed a full -1% lower, driven by the US with S&P 500 -1.7% and small cap Russell 2000 a full -2.9% lower. Considering this, Europe outperformed massively with Stoxx 600 even 0.5% higher. The US session ticked all the boxes of risk-off. Investors sold off cyclicals (tech, consumer staples, industrials down 2-3%) and bought into defensives (staples and utilities in green). Small caps underperformed considerably, down almost -4% for the week. VIX rose north of 18, highest since early February. Investors flocked into bonds with US10y moving towards 4.4% after briefly touching 4.57% earlier this week. Bitcoin dropped -4% and oil prices -3%. Gold was the outlier, up "only" 0.1%.

This concludes a -1.5% sell-off for global equities the last week, the first down-week since January. Note that Europe was higher (0.5% wtd) so outperformance is still substantial. Light in the tunnel today with US futures a notch higher again.

FI: US Treasury yields rallied on Friday on the back of weaker data and the speculation that the spending cuts from the Department of Government efficiency will slow the economy more than expected. This has also led to a tighter spread between 10Y Treasuries and Bunds during February and they are now again below 200bp. In Germany, CDU/CSU won the election as indicated by the polls and the head of CDU/CSU Merz is expected to form a coalition with SPD and possibly one more party.

FX: Commodity currencies lost out to JPY, CHF and USD on Friday as overall risk sentiment turned sour to end the week. EUR made a slight bounce following results of the German election when markets opened yesterday.

Daily Pivots: (S1) 1.0436; (P) 1.0474; (R1) 1.0499; More...

Intraday bias in EUR/USD remains neutral and outlook is unchanged. Strong resistance is expected from 38.2% retracement of 1.1213 to 1.0176 at 1.0572 to complete the consolidation pattern from 1.0176. On the downside, break of 1.0400 support will turn bias back to the downside for 1.0176/0210 support zone. However, decisive break of 1.0572 will raise the chance of reversal, and target 61.8% retracement at 1.0817.

In the bigger picture, immediate focus is on 61.8 retracement of 0.9534 (2022 low) to 1.1274 (2024 high) at 1.0199. Sustained break there will solidify the case of medium term bearish trend reversal, and pave the way back to 0.9534. However, reversal from 1.0199 will argue that price actions from 1.1274 are merely a corrective pattern, and has already completed.

Daily Pivots: (S1) 148.55; (P) 149.65; (R1) 150.37; More...

Intraday bias in USD/JPY stays on the downside at this point. Fall from 158.85 is seen as the third leg of the pattern from 161.94 high. Deeper decline should be seen to 61.8% retracement of 139.57 to 158.86 at 146.32 next. On the upside, above 150.72 resistance will turn intraday bias neutral and bring consolidations first, before staging another decline.

In the bigger picture, price actions from 161.94 are seen as a corrective pattern to rise from 102.58 (2021 low). In case of another fall, strong support should be seen from 38.2% retracement of 102.58 to 161.94 at 139.26 to bring rebound. However, sustained break of 139.26 would open up deeper medium term decline to 61.8% retracement at 125.25.

Daily Pivots: (S1) 1.2615; (P) 1.2647; (R1) 1.2669; More...

Intraday bias in GBP/USD remains on the upside as rise from 1.2099 is in progress. Further rally should be seen to 1.2810 resistance first. Firm break there will target 61.8% retracement of 1.3433 to 1.2099 at 1.2923 next. On the downside, below 1.2562 minor support will turn intraday bias neutral again first. But another rise will remain in favor as long as 1.2331 support holds, in case of retreat.

In the bigger picture, rise from 1.0351 (2022 low) should have already completed at 1.3433 (2024 high), and the trend has reversed. Further fall is now expected as long as 1.2810 resistance holds. Deeper decline should be seen to 61.8% retracement of 1.0351 to 1.3433 at 1.1528, even as a corrective move. However, firm break of 1.2810 will dampen this bearish view and bring retest of 1.3433 high instead.

Daily Pivots: (S1) 0.8962; (P) 0.8984; (R1) 0.8999; More…

Intraday bias in USD/CHF remains neutral. Consolidation pattern from 0.9200 might extend with deeper decline. But larger rally is still expected to continue as long as 38.2% retracement of 0.8374 to 0.9200 at 0.8884 holds. On the upside, above 0.9053 will bring retest of 0.9200 resistance. However, sustained break of 0.8884 will indicate bearish reversal, and target 61.8% retracement at 0.8690 instead.

In the bigger picture, decisive break of 0.9223 resistance will argue that whole down trend from 1.0342 (2017 high) has completed with three waves down to 0.8332 (2023 low). Outlook will be turned bullish for 1.0146 resistance next. Nevertheless, rejection by 0.9223 will retain medium term bearishness for another decline through 0.8332 at a later stage.