Scotiabank strategists reported that Germany’s IFO survey was weaker than expected in April, with Gulf tensions and energy price worries weighing on the data. The Expectations component came in at 83.3, its lowest level since 2023, while the Business Climate index was 84.4.
The weaker readings point to softer German growth prospects and a sluggish pace at best. Despite this, the euro saw little immediate reaction, and EUR/USD rebounded from a minor dip to trade at session highs as North American trading began.
On the technical side, short-term signals suggest EUR/USD losses are steadying near support at 1.1675. The pair may extend intraday gains above 1.1700 and could move back towards 1.1745/65.
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We are seeing a familiar pattern where weak German economic data is weighing on the outlook. The latest IFO Business Climate index for April 2026 came in at 85.1, missing expectations, largely due to concerns over energy prices as Brent crude pushes past $95 a barrel. This situation softens the prospects for German growth for the rest of the quarter.
Despite this, the Euro has shown resilience, holding its ground around the 1.0750 level. We believe this strength is anchored by recent inflation figures, with the March 2026 Eurozone CPI print coming in at a sticky 2.6%. This data keeps pressure on the European Central Bank to delay any potential rate cuts, providing a floor for the currency.
For derivative traders, this suggests that outright bearish bets on the Euro may be premature in the coming weeks. Selling out-of-the-money puts on EUR/USD could be a viable strategy to collect premium, capitalizing on the currency’s refusal to break lower. This approach benefits from the current stability and the potential for a modest recovery toward the 1.0820 resistance area.
We saw a similar dynamic play out in the third quarter of 2025 when a slump in German industrial orders failed to break the Euro’s support. Back then, the pair consolidated for several weeks before rallying as broader market focus shifted. This historical precedent suggests that the market may be looking past Germany’s immediate industrial weakness for now.
