SwanBitcoin445X250

Dutch central bank

The EUR/USD pared earlier gains after weaker German sentiment data sent more signals of a double-dip recession in the European Union. The pair dropped to an intraday low of 1.2144.

EUR/USD
EUR/USD erased earlier gains

German business sentiment worsened

After months of improvements, the sentiment among business managers in Germany deteriorated in December as the coronavirus cases continued to rise. According to the ifo Institute, the Business Climate Index declined from 92.2 in December to 90.1 in January as the government announced a new lockdown. This figure was below the estimated 91.8. 

In the same period, the current assessment declined from 91.3 to 89.2, lower than the estimated 90.6. Similarly, the business expectations rose from 93.0 to 91.1.

These numbers are important because they have a broad effect on the overall economy. For example, highly-confident companies tend to buy more products and employ more people. When confidence is low, they fear about the future and slash their research and development (R&D) and other capital utilisation. 

US data ahead

The EUR/USD pair also dropped as global risks rose after reports said that the Biden administration would ban flights from more than 20 countries. Some of the countries likely to be affected are the United Kingdom, Ireland, and South Africa. 

Meanwhile, forex investors are watching for the upcoming Fed interest rate decision and economic data from the United States. In general, they expect the Fed to leave interest rates and its quantitative easing policies unchanged. 

On Thursday, the statistics bureau will publish the US GDP numbers. Economists believe that the economy expanded in the fourth quarter because of the robust Christmas shopping. On Friday, the bureau will

Read more from our friends at Invezz.com