Business confidence is rising in Germany: 112.9 in the IFO Business Climate. The Expectations component is a bit lower with 105.2. Is this due to the fear of the French elections ahead of the vote?

The survey was held before yesterday’s vote. In any case, the current situation is positive with 121.1 points. There were also some minor upwards revisions. The results extend the trend of gains.

EUR/USD is marginally higher around 1.0860. Resistance awaits at 1.0905, followed by 1.0960.

Germany’s No. 1 Think-tank was expected to show a minuscule advance in business confidence: 112.5 points in April after 112.3 in March. The Expectations component was predicted to tick up from 105.7 to 106 and the Current Assessment measure was projected to slide from 119.3 to 119.2.

EUR/USD was trading just under 1.0850 ahead of the publication. The most important event is the French elections. Centrist Emmanuel Macron topped the first round and will face extremist Marine Le Pen. He is expected to beat her quite easily.

The news sparked an early rally in EUR/USD. The pair hit a 5-month high of 1.0930 in Asian trading but this was followed by a profit taking move later on. We are still over 100 pips above the closing levels on Friday.