Rebound in EUR/USD slips below 1.0790 prior to support on weak German factory orders and attention is paid to EU/US statistics.

After weak German data, the EUR/USD pair finds it difficult to maintain its corrective rally from a three-month low.

German Factory Orders fell -11.7% YoY, the lowest level since the early 2020s.

Fears of a recession in the Eurozone clash with talk of a gentle landing in the US to support a negative view of the Euro pair.

Clear guidance is expected from the US ISM Services PMI for August and the Eurozone Retail Sales for July.

After negative German data was released early on Wednesday, the EUR/USD fell from its intraday high to 1.0730 while fading the corrective recovery off the lowest level in three months. In doing so, the Euro pair battles expectations of a US soft landing against the US Dollar’s retreat amid the recessionary conditions surrounding the Old Continent. Nevertheless, the cautious attitude leading up to the US ISM Services PMI for August and the Eurozone Retail Sales for July has pushed the pair sellers lately.

German factory orders fell by 11.7% YoY, against an expected -4.0% and an upwardly revised 7.6% preceding figure. This was the worst decline since April 2020. Yet, the monthly figures also saw a significant drop, coming in at 10.5% as opposed to the previous 3.3% (which had been lowered from 3.0%).

The depressing results of the Eurozone Producer Price Index (PPI) for July the day before and the economic concerns mentioned in the European Central Bank’s (ECB) monthly survey of consumer inflation expectations may be seen as being in line with each other.

The positive US Factory Order data and remarks from Fed officials support the US Dollar bulls, it should be emphasized, even as a decline in yields permits Greenback buyers to take a break. Tuesday’s US Factory Orders for July fell to the lowest point since mid-2020, with a MoM of -2.1%, below both the 2.3% prior gain and the -0.1% forecast. Nonetheless, deliveries of goods remained firmer, orders excluding transportation up 0.8% MoM and inventories showed a gain for the first time in three months. Nevertheless, the strength of the US dollar is supported by Federal Reserve (Fed) Governor Christopher Waller’s justification of a tight monetary policy in a CNBC interview and Cleveland Federal Reserve President Loretta Mester’s rejection of rate decreases.

In other places, worries about additional stimulus for China’s real estate industry appear to have supported the property shares, particularly with Country Garden’s avoidance of default, according to the Chinese media. The market’s prior risk-off attitude appears to have been challenged by the same, which has put a floor beneath the price of EUR/USD.

In this context, US and European stock futures record slight losses while tracking Wall Street benchmarks, while the US Dollar Index (DXY) oscillates at its highest level since March 15—roughly at 104.80 at the latest.

Further information about the US soft landing and the Eurozone recession will be watched for indications of where to go next.

Methodical examination

A daily close below the rising support line that has been in place since March—currently the immediate resistance at 1.0790—points the EUR/USD bears in the direction of June’s low of 1.0635.

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