US durable goods orders overview
Wednesday's US economic docket highlights the release of Durable Goods Orders data for September. The US Census Bureau will publish the monthly report at 12:30 GMT and is expected to show that headline orders declined 1.1% during the reported month. Conversely, orders excluding transportation items, which tend to have a broader impact, are anticipated to have increased by 0.4% in September.
Explaining the relevance of the data, Yohay Elam, FXStreet's own analyst, writes: “The data is of high importance as it feeds into Gross Domestic Product figures due out on Thursday. It will be the first read of US GDP for the third quarter, and it may confirm or dismiss fears of a substantial slowdown. The market reaction is set to be straightforward – better than expected figures are dollar positive, and weaker data is dollar negative.”
How could it affect EUR/USD?
A surprisingly stronger/positive reading will mark a fifth consecutive month of increase and lift expectations from Thursday's release of the Advance Q3 GDP report. This could further fuel expectations for an early policy tightening by the Fed and should be enough to boost the US dollar. Alternatively, a weaker than expected print would mark a reversal of the growth recorded in August and prompt some USD selling, though the immediate market reaction is likely to be muted.
Investors might refrain from placing aggressive USD bearish bets heading into Thursday's key data risk and the upcoming FOMC monetary policy. This, in turn, suggest that the path of least resistance for the EUR/USD pair remains to the downside and any attempted recovery move might still be seen as a selling opportunity.
Meanwhile, Eren Sengezer, Editor at FXStreet, provided a brief technical outlook for the EUR/USD pair: “The Relative Strength Index (RSI) indicator on the four-hour chart is moving sideways a little below 50, reflecting EUR/USD's indecisiveness in the near term.”
Eren also offered important technical levels to trade the major: “The initial support on the downside is located at 1.1600 (psychological level, 100-period SMA). The pair dropped below that level on Wednesday but didn't have a difficult time recovering. A daily close below 1.1600, however, could attract sellers and cause the pair to slide toward 1.1570 (static level) and 1.1525 (2021 low).”
“On the upside, resistance at 1.1620 (Fibonacci 23.6% retracement September downtrend, 50-period SMA) stays intact ahead of 1.1650 (200-period SMA) and 1.1670 (Fibonacci 38.2% retracement),” Eren added further.
Key Notes
• Durable Goods Orders Preview: Five scenarios to trade the event with EUR/USD
• EUR/USD Forecast: Key technical levels hold as focus shifts to US data
• EUR/USD regains the smile above 1.1600, looks to US data
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.
