US durable goods orders overview

Wednesday's US economic docket highlights the release of Durable Goods Orders data for April. The US Census Bureau will publish the monthly report at 12:30 GMT and is expected to show that headline orders rose 0.6% during the reported month as compared to the 1.1% growth reported in March. Orders excluding transportation items, which tend to have a broader impact, are also anticipated to have increased by 0.6% in April, down from a 1.4% increase in the previous month.

How could it affect EUR/USD?

A surprisingly stronger than expected readings should allow the US dollar to build on its solid rebound from a nearly one-month low touched the previous day. Conversely, disappointing data will add to concerns about softening economic growth and force investors to scale back expectations for a more aggressive policy tightening by the Fed. That said, any immediate market reaction is more likely to be short-lived ahead of the FOMC monetary policy meeting minutes, scheduled for release later during the US session.

Eren Sengezer, Editor at FXStreet, outlined important technical levels to trade the EUR/USD pair: “In case Tuesday's monthly high at 1.0750 is taken as the end-point of the uptrend that started on May 13, the Fibonacci 23.6% retracement at 1.0660 forms significant support. Right below that level, the 200-period SMA on the four-hour chart aligns as next support at 1.0640. With a four-hour close below the latter, EUR/USD could extend its slide toward 1.0600, where the ascending trend line meets the Fibonacci 38.2% retracement level.”

“On the upside, 1.0700 (psychological level, static level) aligns as initial resistance ahead of 1.0750 (monthly high). The pair needs to reclaim 1.0700 and stabilize above that level for bulls to retain control of the pricing action,” Eren added further.

Key Notes

 •  EUR/USD Forecast: Bulls need to defend 1.0660 to keep sellers at bay

 •  EUR/USD: Rally unlikely to extend towards the 1.08-1.09 area – ING

 •  EUR/USD: Bears regain control and visit the sub-1.0700 area

About US durable goods orders

The Durable Goods Orders, released by the US Census Bureau, measures the cost of orders received by manufacturers for durable goods, which means goods planned to last for three years or more, such as motor vehicles and appliances. As those durable products often involve large investments they are sensitive to the US economic situation. The final figure shows the state of US production activity. Generally speaking, a high reading is bullish for the USD.

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