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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

Thursday’s US economic docket highlights the release of durable goods orders data for May. The US Census Bureau is scheduled to release the monthly report at 12:30 GMT. Having collapsed 17.7% in April, the headline orders are expected to record strong growth of 10.6% during the reported month. Core durable goods orders, which exclude transportation items and tend to have a broader impact than the volatile headline figures, are seen rising 2.5% as compared to the 7.7% fall recorded in the previous month. Non-defence capital goods orders (excluding aircraft and parts) – seen as a proxy for business investment – are forecasted to climb 1% vs. the 6.1% drop in April.

As Joseph Trevisani, Senior Analyst at NDDFX explains: “The American consumer proved ready to shed the lockdown blues in May returning to the stores and malls in great numbers and sending retail sales figures soaring to the largest monthly increase on record. It would be illogical to expect that the durable goods, a component of retail spending, will perform differently.”

How could it affect EUR/USD?

Ahead of the key release, the EUR/USD pair remained under some selling pressure for the second straight session and was being pressured by some follow-through USD buying interest. A stronger-than-expected reading will be enough to provide an additional boost to the greenback and drag the pair back towards challenging weekly lows, around the 1.1170-65 region. Conversely, any disappointment seems unlikely to have any major impact on the buck, which is likely to remain supported by growing worries about a surge in the number of new coronavirus cases globally.

Meanwhile, Yohay Elam, NDDFX’s own analyst provided some important technical levels to trade the major and writes: “Support awaits at the round 1.12 level, which worked as support last week. It is followed by 1.1170, the previous week’s low. Further down, the next noteworthy cushion is only at 1.1075, levels seen in early June. Resistance awaits at 1.1260, a temporary cap last week. It is followed by 1.1290, another swing high, and then by the mighty 1.1350.”

Key Notes

   •  US Durable Goods Orders May Preview: Retail trumps the lockdown blues

   •  EUR/USD Forecast: Gloom, doom, and double top point lower as coronavirus rages in the US

   •  EUR/USD Price Analysis: Focus now shifted to 1.1170

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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