The euro dripped below USD1.08 this afternoon after failing to capitalise on the better-than-expected German Ifo reading this morning. The euro slid through the USD1.08 mark to a low of USD1.0789, down 0.3pc, before regaining some ground and rising to USD1.0815. The Ifo Institute said its business climate index rose to 90.8 in August from 89.3 in July, ahead of forecasts for an increase to 90. It is the fourth month in succession that the Ifo has risen and the institute said the data underpins its forecast for an economic recovery in Germany in the second half of this year.
But the normally closely watched index failed to support the euro as the market's view that the US will outpace Europe this year continued to hold sway on the forex. Technical analysts say no base has formed as yet in the euro/dollar cross and the single currency has the potential to fall further and needs to find a footing above USD1.09 if it is to have any security. Earlier today, European Commission president Romano Prodi said he was not concerned by the fluctuations of the euro, saying that it was now "behaving like a normal currency". //www.fxcentre.com