German IFO - Good Number but EURUSD still in trouble

This Wednesday morning at 9am GMT (4am EST) the numbers for the German Ifo from the Institute for Economic Research. This consists of 3 numbers the most important of which is the Business Climate Number. It is an index which is based on surveyed manufacturers, builders, wholesalers, and retailers. It is a leading indicator of the economic situation and is highly regarded as historically it has corresponded to how the market has done. Here is the Data:

GERMANY NOV IFO BUSINESS CLIMATE: 109.3 V 107.5E; CURRENT ASSESSMENT:112.3 V 110.4E
- Expectations Survey: 106.3 v 104.7e
- Prior Business Climate revised higher from 107.6 to 107.7
- Prior Expectations Survey revised higher from 105.1 to 105.2

This was a decent deviation higher, actually +1.8 higher than the expected 107.5 , and in the past deviations of this amount have lead to good moves higher on the EURUSD and other Euro forex cross pairs. The Euro has been under alot of pressure the past few weeks with the situation in Ireland opening the old wounds that were caused by the Greek situation just 1 year ago. The markets gave the Euro a break while the Fed's QE2 was in focus, but now that is a done deal this has taken center stage. This week especially the sell-off has intensified, with last week's low being taken out, we recall that the EURUSD did then recover significantly from last wednesday until the end of the week, rallying some +300 pips. Since the market commenced for trading this week the EURUSD has moved down and comments from Merkel yesterday about the Euro being in a crisis did not help. The asian session saw some moderate retracement up for the EURUSD after the step losses seen yesterday. Euro Peripheral Bond spreads again were widening as the London open began and all the euro forex crosses dropped from the start. Concerns are that the debt problem will spread to Portugal, although their problems are different than Ireland, but their economy is small enough that the EuroZone rescue fund should be able to cope with this. The bigger concern is the situation in Spain because they have a much larger economy and this would bring alot of pressure on bail-out fund.

As the included chart shows, the EURUSD spiked up some 10-15 pips from its pre news release price of around 1.3335, but within 1 minute is was back down to this price and quickly moved below it and lower. With the strong negative sentiment and general bad news about the Euro, it was not wise to try and trade with the number when it was positive, in fact when there is a strong Sentiment-based Flow in the market, when there is a number which moves the market in the other direction, it can be a good entry to get back into the Trend. This moved very quick and already being short on some position trades did not get a chance to add here. Spike traders did have a moment to get out within a few pips of entry unless they experienced slippage, but it does help to be aware of the Sentiment-based Price and News Flow and Major Trends in the market even if you just take forex news spike trades.