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The U.S. Census Bureau reported that durable goods orders in August improved 0.2% month-on-month (m/m) after a 5.6% decline in the previous reading.
The EUR/USD currency pair, one of the important barometers of global economic sentiment, found itself under pressure during the early Asian session today and struggled around the 1.0500 mark.
recently report FXStreets highlighted that one of the key drivers behind the weakening of the EUR/USD pair is the continued strength of the US dollar. The US dollar index (DXY), which measures the value of the USD relative to a basket of foreign currencies, climbed to 106.60, reaching its highest point since November last year.
Another major factor contributing to the euro’s struggle against the US dollar is the rise in US Treasury yields. The 10-year Treasury yield stabilized at 4.618%, a level not seen since 2007. Higher yields on US government bonds make the US dollar more attractive to investors, as it offers the potential for higher returns compared to other currencies and assets.
The euro has also faced headwinds from discouraging economic data coming from the eurozone. Specifically, as reported by GfK, German consumer sentiment fell to -26.5 in October, down from -25.6 in September. The decline suggests consumer confidence in the eurozone’s largest economy has weakened, potentially indicating weaker consumer spending and economic activity.
US durable goods orders beat expectations
In a surprising turn of events, the US Census Bureau reported that durable goods orders in August improved 0.2% month-on-month (m/m) after a 5.6% decline in the previous reading. This positive data exceeded market expectations, which had forecast a decline of 0.5% m/m.
Durable goods orders excluding transportation also outperformed expectations, rising 0.4% m/m compared to an expected gain of 0.1%. Core capital goods orders saw even stronger growth, rising 0.9%, surpassing market estimates of 0%. These figures boosted the US dollar, leading to gains against other major currencies including the euro.
Despite the strength of the US dollar, markets remain cautious due to various uncertainties. Risk aversion has been observed as investors grapple with the prospect of higher interest rates and an imminent government shutdown in the US. All eyes are on the Federal Reserve Chairman jerome powellWho is going to address the public this week.
Meanwhile, market participants are keeping a close eye on upcoming economic data releases. Preliminary inflation data from Spain and Germany for September, along with consumer and business confidence data from the eurozone, are expected to provide information about the health of the eurozone economy.
In the United States, the release of the weekly jobless claims report, the third revision of gross domestic product (GDP) for the second quarter and pending home sales data will be closely watched.
Additionally, all eyes will be on the US Core Personal Consumption Expenditure (PCE) price index, with the annual figure expected to decline to 3.9% from 4.2%. These data points will be helpful in guiding traders’ decisions and determining the direction of the EUR/USD pair.
Benjamin Godfrey is a blockchain enthusiast and journalist who loves writing about real-life applications of blockchain technology and innovations to promote general acceptance and worldwide integration of the emerging technology. His desire to educate people about cryptocurrencies drives his contributions to well-known blockchain media and sites.
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