US durable goods orders overview

Monday's US economic docket highlights the release of Durable Goods Orders data for May. The US Census Bureau will publish the monthly report at 12:30 GMT and is expected to show that headline orders remained flat during the reported month as compared to the 0.5% rise in April. Orders excluding transportation items, which tend to have a broader impact, are anticipated to have increased by 0.3% in May, down slightly from a 0.4% in the previous month.

How could it affect EUR/USD?

A weaker-than-expected report would further fuel concerns that the growth momentum in the US is starting to cool and force investors to scale back their expectations for more aggressive Fed rate hike moves. This would be enough to exert some downward pressure on the US dollar and allow the EUR/USD pair to make it through the 50-day SMA resistance.

Conversely, upbeat figures are more likely to be overshadowed by a goodish recovery in the global risk sentiment, which should continue undermining the safe-haven greenback. The fundamental backdrop suggests that the path of least resistance for the USD is to the downside and up for the EUR/USD pair, which has been trending higher over the past two weeks or so.

Eren Sengezer, Editor at FXStreet, outlined important technical levels to trade the EUR/USD pair: “As of writing, EUR/USD was trading slightly above the 200-period SMA on the four-hour chart, which is currently located at 1.0580. In case the pair starts using that level as support, 1.0600 (Fibonacci 61.8% retracement of the latest downtrend, psychological level) aligns as interim resistance ahead of 1.0640 (static level) and 1.0660 (static level, former support).”

“On the downside, key support seems to have formed at 1.0560 (Fibonacci 50% retracement, 100-period SMA). A four-hour close below that level could attract bears and cause the pair to retreat toward 1.0520 (Fibonacci 38.2% retracement, 50-period SMA) and 1.0500 (psychological level),” Eren added further.

Key Notes

 •  EUR/USD Forecast: Euro could push higher as long as 1.0560 support holds

 •  EUR/USD closes in on 1.0600 amid risk flows-led USD slide

 •  EUR/USD bulls approach 1.0600 hurdle, US Durable Goods Orders, ECB’s Lagarde eyed

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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