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Fundamental Forex Analysis

When are the US durable goods orders and how could they affect EUR/USD?

US durable goods orders overview

Friday’s US economic docket highlights the release of durable goods orders data for March. The US Census Bureau is scheduled to release the monthly report at 12:30 GMT. Economists expect that durable goods orders plunged 11.9% during the reported month, the biggest drop since August 2014. Core durable goods orders, which exclude transportation items and tend to have a broader impact than the volatile headline figures, are seen dropping 5.8% for the month. Non-defence capital goods orders (excluding aircraft and parts) – seen as a proxy for business investment – are forecasted to fall by 6%, which will mark the biggest decline since the financial crisis.

As Joseph Trevisani, Senior Analyst at NDDFX explains: Even though the vast majority of the unemployed receive benefits, the loss of upwards of half their buying power combined with the social restrictions and store closures in much of the country have crippled an economy that just six weeks ago had near record employment and the longest expansion since the Second World War.

How could it affect EUR/USD?

The recent price action in the markets has been exclusively driven by developments surrounding the coronavirus saga. Hence, the data – though might influence the USD price dynamics – seems unlikely to be a major gamechanger.

Ahead of the release, the EUR/USD pair staged a solid intraday recovery from one-month lows and was last seen trading around the 1.0800 round-figure mark. Meanwhile, Yohay Elam, NDDFX’s own analyst provided some important technical levels to trade the major and writes: “Next up, 1.0850 was a swing high earlier in the week, and 1.0885 was a stubborn cap. Further up, 1.0930 and 1.0995 come into play.”

“Support awaits at 1.0720, which was a stepping stone on the way up in mid-March, and the 2020 trough of 1.0640 is already in sight. Further down, 1.0580 and 1.05 are eyed,” Yohay added further.

Key Notes

   •  US Durable Goods Orders March Preview: Ominous portents for consumption

   •  EUR/USD Forecast: Tumbling to 1.0640? Failed EU Summit, downbeat data, bearish technicals point down

   •  EUR/USD Price Analysis: Still scope for a drop to 1.0635

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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