The EURUSD pair traded lower on Wednesday, November 24, down 0.44% to 1.1198. Selling resumed after German macro data came out. IFO readings came in worse than expected as manufacturing supply bottlenecks and spiraling coronavirus infections have darkened Germany's growth prospects.
The IFO business climate index declined from 97.7 to 96.5 in November vs. a forecasted 96.6. The current situation index decreased to 99.0, down from 100.1 in October and the median consensus that called for 99.5. The IFO expectations (for the next 6 months) dropped to 94.2 in November against 95.4 in the previous month and 95.0 expected.
The single currency sank to an intraday low of 1.1186 after US macro data were released. Initial jobless claims increased by 199,000 in the week ended November 20, while durable goods in October fell by 0.5% MoM. GDP expanded by 2.1% QoQ from July to September.
Meanwhile, Germany has tightened measures to combat coronavirus. This move also exerted a negative impact on EURUSD dynamics.
Today’s macro agenda (GMT+3)
Major currencies are trading in positive territory. The British pound (+0.19%) is among today’s outperformers. All currencies are undergoing a technical correction. Sterling is constrained by uncertainty over Northern Ireland's fishing rights as the negotiations reached an impasse.
There is a large lineup of speakers today, while the US market is offline in observance of Thanksgiving Day. The DXY index corrected to 96.70 and could drop to 96.65. For the time being, the correction looks sluggish as market participants expect the US dollar to continue strengthening ahead of the December FOMC meeting.
EURUSD fell to the 112-degree angle (Gann level from 1.1322), with a pullback of 0.28%, or 31 pips. A complex price action pattern in the form of a truncated formation has shaped up on the hourly TF. Weak macro data and Covid-induced negativity pushed the euro towards 1.12. The recovery looks sluggish, so selling could resume for the single currency from the 55-day SMA (LB of the balance line at 1.1230).
A correction up to 1.1320 is overdue in the current formation with several lower bottoms. The only thing that remains to be seen at this point is what will trigger the closure of long positions in the dollar.