US Durable Goods Orders overview

Monday's US economic docket highlights the release of Durable Goods Orders data for January. The US Census Bureau will publish the monthly report at 13:30 GMT and is expected to show that headline orders declined by 4% during the reported month, down sharply from the 5.6% rise reported in December. Orders excluding transportation items, which tend to have a broader impact, are anticipated to register a modest 0.1% growth in January as compared to the 0.2% fall recorded in the previous month.

How could it affect EUR/USD?

Ahead of the data, the modest recovery in the risk sentiment weighs on the safe-haven US Dollar and assists the EUR/USD pair to bounce off over a seven-week low touched earlier this Monday. Any disappointment from the US macro data could prompt additional USD profit-taking, though hawkish Fed expectations should help limit deeper losses.

A stronger report, on the other hand, will reaffirm bets for further policy tightening by the Fed, which, in turn, should lift the US Treasury bond yields and the Greenback. Apart from this, looming recession risk, along with geopolitical tensions, favour the USD bulls and suggest that the path of least resistance for the EUR/USD pair is to the downside.

Eren Sengezer, Editor at FXStreet, offers a brief technical outlook and outlines important technical levels to trade the major: “EUR/USD stays within the lower half of the descending regression channel coming from early February. Although the Relative Strength Index (RSI) indicator on the four-hour chart suggests that the pair is about to turn oversold, the lower limit of that channel at 1.0530 could be tested before sellers target 1.0500 (psychological level) and a fresh 2023-low at 1.0480.”

“In case the pair rises above 1.0570 (mid-point of the descending channel) and stabilizes there, it could extend its correction toward 1.0600 (20-period Simple Moving Average, psychological level, static level) and 1.0640 (50-period SMA),” Eren adds further.

Key Notes

 •  EUR/USD Forecast: Euro on track to challenge 2023 lows

 •  EUR/USD finds some respite near 1.0530, looks at data

 •  EUR/USD seen at 1.05 by mid-year, recovery to 1.10 expected by year-end – BofA

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.