US durable goods orders overview
Tuesday's US economic docket highlights the release of Durable Goods Orders data for March. The US Census Bureau will publish the monthly report at 12:30 GMT and is expected to show that headline orders rose 1% during the reported month as compared to the 2.1% fall reported in February. Orders excluding transportation items, which tend to have a broader impact, are anticipated to have increased by 0.6% in March and reversed the previous month's decline.
How could it affect EUR/USD?
A surprisingly stronger than expected readings would lift expectations from Thursday's release of the Advance Q1 GDP report and reinforce bets for a more aggressive policy tightening by the Fed. This would result in higher US Treasury bond yields, which should allow the US dollar to prolong its recent bullish trajectory to the highest level since March 2020.
Conversely, any disappointment is more likely to be overshadowed by concerns about the economic fallout from prolonged COVID-19 lockdowns in China. This, along with the prevalent risk-off mood, should act as a tailwind for the safe-haven buck, suggesting that the path of least resistance for the EUR/USD pair is to the downside.
Meanwhile, Eren Sengezer, Editor at FXStreet, provided a brief technical outlook for the EUR/USD pair: “The latest candle on the four-hour chart closed below 1.0700. The Relative Strength Index (RSI) indicator on the same chart stays near 40 and the descending line coming from April 21 stays intact, highlighting EUR/USD's bearish bias in the near term.”
Eren also offered important technical levels to trade the major: “It's worth noting that EUR/USD will touch its weakest level since April 2017 with a drop below 1.0635. Sellers might see such a move as a profit-taking opportunity and trigger a correction in the pair. In that case, 1.0700 (psychological level) aligns as the next recovery target before 1.0730 (static level) and 1.0760 (static level).”
“On the downside, a daily close below 1.0640 is likely to open the door for additional losses toward 1.0600 (psychological level) and 1.0570 (static level from March 2017),” Eren added further.
Key Notes
• EUR/USD Forecast: Bears eye 1.0640 as next target
• EUR/USD: Unlikely to break out broad downtrend until Eurozone’s macro backdrop improves – HSBC
• EUR/USD: Downside risks dominate – Commerzbank
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.