In order to see how things have changed for the euro and the eurozone, it is possible to look only at the market reaction to the morning data IFO. They used to be a barometer of business sentiment, not only for Germany but also for the euro zone in a broader sense, and, therefore, for the euro. Not anymore. Usually, increasing the index by two units above the forecast for strong enough momentum for the euro. This time, the euro weakened even before the data (quite possibly because of the rumors), and remained weak after publication. The fact that business sentiment strengthened, lets focus on the growing economic inequality in the eurozone. In addition, it has affected the political rhetoric that is becoming more irritable (especially in Germany). Thus, it is as if the elasticity of the German economy began to be perceived as negative for the euro as a whole, increasing the chances that a tipping point is reached in the not too distant future. Even taking into account the earlier good news, is not perceived in a negative light for the euro, its prospects are unfavorable.
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