EURUSD has been flirting with its 50-week moving average and not going anywhere as mixed expectations about the Fed’s policy and Euro Zone’s economic activity kick in. Yet recent data indicate that the Euro Zone recession is becoming increasingly obvious – shown in the blue line – while US data which the Fed likes to follow are still mixed enough to be reluctant to make any move. Data announced today out of Germany shows that IFO’s economic activity expectations – shown in red line – have turned up and may be inclined to follow the spread between the 2 and 10-year horizon inflation expectations of Euro-Zone and the US – shown in green. This suggests that the EURUSD pair may be inclined to move toward its 200-week moving average which hovers around 1,1150.
