Euro drifts lower as investors’ cautiousness offsets upbeat German factory data

EUR/USD eases to levels near 1.1400 after failing to extend gains beyond 1.1470 last week.
German Factory Orders for May beat expectations, and investors' sentiment improves significantly.
Fresh concerns about the Middle East peace deal are offsetting the impact of strong Eurozone figures.

Guillermo Alcala FXStreet

The Euro (EUR) shows a moderately negative stance against the US Dollar (USD) on Monday, in a calm start of the week. German Factory Orders figures released earlier on the day beat expectations, but ongoing concerns about the fate of the US-Iran peace process are weighing on risk sentiment and underpinning support for the Greenback.

The EUR/USD pair is trading at the 1.1415 area at the time of writing, after a failure at the 1.1470 area late last week, while the US Dollar Index (DXY), which measures the value of the USD against a basket of six peers, appreciates beyond the 101.00 level, after bouncing from the 100.60 area on Friday.

German factory data, investors' sentiment improve

In the Eurozone, data from Germany beat expectations, with Factory Orders rising 1.9% MoM in May, well above the 1.2% increase expected, partially reversing the 3.2% contraction seen in April. Later on the day, the Eurozone Sentix Investor Confidence index for July improved to -3.1, its best reading since the beginning of Iran's war and a significant recovery from the -13.4 print seen in June.

Investors’ enthusiasm about these figures, however, has been dampened by fresh concerns about the US-Iran peace deal. On the one hand, Iranian authorities have reiterated their willingness to collect fees from vessels crossing the Strait of Hormuz, a possibility flatly rejected by the US, while on the other, Iran and Israel have escalated their rhetoric, casting shadows about the fate of a fragile ceasefire.

Later on the day, Eurozone’s Producer Price Index (PPI) and Retail Sales data will provide further clues about the region’s economic momentum. In the US, the focus will be on the ISM Services Purchasing Managers’ Index (PMI), which is expected to confirm the picture of a resilient US economy and is likely to frame the speech of Fed Governor Christopher Waller, due later on the day.

Economic Indicator

Factory Orders s.a. (MoM)

The Factory orders released by the Deutsche Bundesbank is an indicator that includes shipments, inventories, and new and unfilled orders. An increase in the factory order total may indicate an expansion in the German economy and could be an inflationary factor. It is worth noting that the German Factory barely influences, either positively or negatively, the total Eurozone GDP. A high reading is positive (or bullish) for the EUR, while a low reading is negative.

Economic Indicator

Sentix Investor Confidence

With among 1600 financial analysts and institutional investors, the Sentix Investor Confidence is a monthly survey which shows the market opinion about the current economic situation and the expectations for the next semester. The index, released by the Sentix GmbH, is composed by 36 different indicators. Usually, a higher reading is seen as positive for the Eurozone, that means positive, or bullish, for the Euro, While a lower number is seen negative or bearish for the unique currency.

GBP/USD dips below 1.3350 with bullish momentum losing steam

The British Pound ticks lower against the US Dollar Monday, attempting to close a seven-day rally, as tensions rise again in the Strait of Hormuz, one of the critical points in the peace process between Washington and Tehran. The GBP/USD pair trades near 1.3340 at the time of writing, down from 1.3387 highs last week, although it maintains a near-term bullish trend intact.

EUR/USD drops toward 1.1400 as US Dollar rebounds

EUR/USD pair trades marginally lower, heading toward 1.1400 in the European session on Monday. The pair faces slight selling pressure as the US Dollar gains ground after a negative weekly close. Middle East concerns and the USD/JPY rally support the Greenback.

Gold hangs near daily low amid Hormuz risks; receding Fed hike bets limit losses

Gold recovers slightly from the daily low, albeit it retains the negative bias, and remains below a two-week high touched earlier this Monday. The US Dollar attracts some safe-haven flows amid tensions over the Strait of Hormuz and undermines the bullion. However, receding US Federal Reserve rate hike bets might hold back USD bulls from placing aggressive bets.

Dogecoin recovery stalls amid early signs of whale support

Dogecoin (DOGE) price nears $0.0770, maintaining a broadly consolidative tone for the last three days after Friday’s 4% rebound. The first-ever meme coin is losing retail interest as DOGE derivatives volume drops, while on-chain data shows early signs that large-wallet investors, commonly referred to as whales, are expanding their holdings.

Week ahead – ISM services PMI and Fed Minutes to shake Fed hike bets

The US dollar is finishing the week on the back foot against most of its major counterparts this week, losing the most ground against the kiwi, the franc and the pound. Despite the pullback, investors remained adamant in their view that the Fed may have to press the rate hike button before the turn of the year.

Kevin Warsh offers no policy clues: Why markets still got their answer

Financial markets came to Sintra looking for clues about the Federal Reserve's (Fed) next move. They largely left with confirmation that Fed Chair Kevin Warsh intends to make those clues much harder to find.