The EUR/USD moved sharply lower recently, and almost tested the 1.10 support area against the US dollar. Recent economic releases were not in favor of the Euro, which jolted the EURUSD pair and pushed it lower. However, there were a couple of releases lined up in the Euro zone, which came on the positive side and stalled the downside in the pair. It was important to note that the pair opened the week on the negative note and traded as low as 1.0971, which was very significant.
The first major release during yesterday's London session was the German IFO Expectations and Business climate index, which was released by the CESifo Group. The forecast was slated for a rise in the index from 105.5 to 106.3 in January 2015. However, the outcome was on the positive side, as the German IFO business climate index climbed to 106.7. Moreover, the IFO Current Assessment also registered a better than expected forecast. It climbed by more than 1 point and stood at 111.7 from 110.0. The report highlighted that the companies were far more satisfied with their current business situation, and were optimistic about the business outlook. This can be considered on the positive side hinting for gains in the near term. The reaction the Euro pairs was also positive, as the EURUSD pair traded above the 1.1200 level. One most point to note from the report was the fact that the manufacturing the business climate indicator rose for the third month in succession.
Spanish Producer Price Index
There was one more release in the Euro zone, as the Spanish Producer Price Index was released. The outcome was not good, as the Spanish PPI declined by 3.7% in December 2014, compared with the same month of the last year. This was more than the last time decline of 1.5%. So, the overall outcome was disappointing, but was overlooked as the German IFO data exceeded the expectation.
Technically, the EURUSD pair has a monster support around the 1.10 area. We already saw the pair reacting around the mentioned area. There is a strong chance of a bounce back towards the 1.14 level if the pair gain bids in the near term. It all depends on how the pair trades moving ahead and whether it can hold the 1.10 level or not.