EUR/USD has paused on Friday, after gaining ground on Thursday. Currently, the pair is trading at 1.1193, up 0.10% on the day. There are no German or eurozone events on the schedule. Today’s highlight is U.S. durable goods orders, with the markets braced for soft numbers. Durable goods orders is expected to decline 2.0% in April, after a strong gain of 2.7% in March. The core reading is expected to slow to 0.1%, down from 0.4% in the previous release. It’s Day 2 of the EU election, with results to be published on Sunday night, after all EU members have voted.

It’s been a quiet month of May for EUR/USD. The currency posted a modest gain of 0.28% on Thursday, the strongest move in either direction this month. Friday could be a quiet day, unless durable goods reports yield unexpected results. The euro managed to scratch gains despite weak German numbers. Manufacturing PMI dropped to 44.3 in April, marking a fifth straight contraction. Services PMIs continue to point to expansion, but the April score fell to 55.0, down from 55.6 a month earlier. There is also concern about business confidence, as Ifo Business Climate slowed to 97.9, shy of the estimate of 99.2. This was the weakest score since January 2010. Germany and the eurozone are gripped in a slowdown, and this has dampened business confidence.

The Federal Reserve continues to preach patience, as the minutes of the May meeting indicated that the Fed has no plans to change interest rates anytime soon. Although Fed members sounded more optimistic about economic growth, they remain committed to maintaining current rate levels, given that inflation remains low. Despite the Fed message, the markets expect at least one rate cut in 2019. The CME Group has priced in a 36% likelihood of a 25-point basis cut at the September meeting. The possibility of lower U.S. rates makes the greenback less attractive to investors and could boost the euro at the expense of the U.S. dollar.

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