US durable goods orders overview
Wednesday's US economic docket highlights the release of Durable Goods Orders data for July. The US Census Bureau will publish the monthly report at 12:30 GMT and is expected to show that headline orders dropped 0.3% during the reported month. Orders excluding transportation items, which tend to have a broader impact, are anticipated to have increased by 0.5% in July.
How could it affect EUR/USD?
Ahead of the key release, the US dollar was back in demand amid some follow-through uptick in the US Treasury bond yields. A stronger report will revive fears that the Fed would begin rolling back its pandemic-era stimulus and provide an additional boost to the greenback. This, in turn, will set the stage for the resumption of the EUR/USD pair's recent leg down witnessed since the beginning of this month.
Conversely, the market reaction to a disappointing reading is more likely to be muted as investors might prefer to wait for Fed Chair Jerome Powell's speech at the Jackson Hole Symposium. The fundamental backdrop suggests that the path of least resistance for the major is to the downside.
Meanwhile, Yohay Elam, FXStreet's own analyst, provided a brief technical outlook: “Euro/dollar still enjoys upside momentum on the four-hour chart and trades above the 50 Simple Moving Average. However, it has failed to break above the 100 SMA and is trading under the 200 SMA. All in all, the picture is mixed.”
Yohay also offered important technical levels to trade the major: “Support awaits at 1.1725, a swing low on Tuesday. It is followed by 1.1705, which capped the pair on its way up. Further down, 1.1690 and 1.1660 await. Resistance is at 1.1750, which was a temporary peak on Monday. The week high of 1.1765 is the next level to watch, and it is followed by 1.1780.”
Key Notes
• Durable Goods Orders Preview: The trigger for a greenback comeback?
• EUR/USD Forecast: Three reasons why this retreat could turn into a larger downfall
• EUR/USD Price Analysis: Immediately to the upside comes in 1.1800
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.
