There are many reasons for why the EUR/USD should continue to rise, the strongest of which has been the Federal Reserve’s plans to ease monetary policy. However, there is another reason why the uptrend in the EUR/USD has been so strong. The following chart shows the correlation between the German IFO Report (white line) and the EUR/USD (orange line). As you can see, the IFO report has been a reliable leading indicator for the price action in the EUR/USD with the white line frequently turning before the orange line.
This is relevant not only because the latest trend in IFO supports a further rise in the EUR/USD, but because the next German IFO report will be released on Friday and it could give us clues on where the EUR/USD is headed next.
