US durable goods orders overview

Tuesday's US economic docket highlights the release of Durable Goods Orders data for August. The US Census Bureau will publish the monthly report at 12:30 GMT and is expected to show that headline orders declined for the second straight month, by 0.4%. Orders excluding transportation items, which tend to have a broader impact, are anticipated to grow by a modest 0.2% in August, matching the previous month's reading.

How could it affect EUR/USD?

Ahead of the key data, retreating US Treasury bond yields, along with the risk-on impulse, prompt some profit-taking around the safe-haven US dollar. That said, growing acceptance that the Federal Reserve will tighten its monetary policy at a faster pace to tame inflation continues to act as a tailwind for the greenback. A stronger-than-expected report will reaffirm hawkish Fed expectations and lift the US bond yields higher, along with the USD.

Conversely, a weaker report will further fuel concerns about a global economic downturn and weigh on investors' sentiment, offering some support to the greenback's safe-haven status. The fundamental backdrop remains tilted firmly in favour of the USD bulls and suggests that the path of least resistance for the EUR/USD pair is to the downside.

Eren Sengezer, Editor at FXStreet outlines important technical levels to trade the major: “The near-term technical outlook shows that EUR/USD is still technically oversold despite the rebound witnessed during the Asian trading hours. In case 0.9600 holds as the end-point of the one-week-old downtrend, the pair needs to flip 0.9650 (descending trend line) into support before targeting 0.9700 (Fibonacci 23.6% retracement level, 20-period SMA).”

“On the downside, 0.9600 (psychological level, static level) forms initial support before 0.9550 (September 26 low) and 0.9500 (psychological level),” Eren adds further.

Key Notes

 •  EUR/USD Forecast: Additional recovery gains likely as long as 0.9600 holds

 •  EUR/USD: 0.90 could be in reach on a dip under 0.95 – Nordea

 •  EUR/USD: Intraday rallies to stall in the 0.9700 area – ING

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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