The results of stress tests of European banks were well received in the financial markets early this week, but the euro has not shown any benefit from it yet. Without examining the details of these tests, the announcement has had a positive effect on the stock market because no bank has failed the tests, apart from the Italian bank Monte dei Paschi, whose difficulties have been well known for a long time.

This morning, traders were scrutinizing the publication of the Ifo survey in Germany. According to the consensus of economists, the business climate in Germany is expected to deteriorate for the sixth consecutive month with an expected figure at 104.5 in October. We do not expect a sharp increase in volatility with this statistic, even if it is important.

Traders should keep a cautious bias on EURUSD with the approaching FOMC meeting on Wednesday. The Federal Reserve is expected to completely exit its program of asset purchases, and a continuation of this program in October would have a very positive effect on the price of the EURUSD. If the Fed concludes its easing program in October, it could do so in December. But markets began to think that the central bank is still reluctant to increase its interest rates in 2015. The outlook for EURUSD depend so much of the FOMC meeting that stress tests of European banks have little statistical importance this week.

The Pound dropped slightly against the Euro after support was gained from the aforementioned results of stress tests on European banks. The British Pound is likely to succumb to some pressure later in the day as analysts are forecasting that the UK CBI Reported Sales report will show a drop in October.

The Greenback was also weaker against the Pound and Euro as approached the release data such as the latest Flash Markit Composite and Services PMIs, Pending Home Sales and the Dallas Fed Manufacturing data reports. A good set of data could see the ‘Greenback’ strengthen.