The euro is slightly lower in the Tuesday session. In European trade, EUR/USD is trading at 1.1840, down 0.20% on the day.
German numbers disappoint
It has been a rough day for German releases, which have badly underperformed. Factory Orders for May fell -3.7%, down from 1.2% in April, and well below the consensus of 1.0%. The reading was the sharpest decline since the first lockdown last summer and reflects the ongoing issue of global supply chain shortages. Supply bottlenecks have been hampering the manufacturing sector, which has seen demand surge as the recovery gains traction.
This was followed by German ZEW Economic Expectations, which slowed for a second straight month. The July report dropped to 63.3, down sharply from 79.8 and shy of the forecast of 75.3 points. Despite this drop, the ZEW report was very optimistic about economic conditions in the next 6 months, noting that the indicator remains at a high level. Still, the fact remains that this is the lowest level in six months, and another drop could raise concerns about the health of the Eurozone’s largest economy.
On the consumer front, there was positive news in the eurozone. Retail Sales for May MoM rebounded with a strong gain of 4.6%, after a decline of -3.9% in April. The reading was ahead of the consensus of 4.4% and points to pent-up demand being unleashed as economies reopen.
Attention will now shift to the US, which releases ISM non-manufacturing PMI later today (14:00 GMT). The sector continues to show strong growth, with readings above the 60-level for the past three months. The forecast stands at 63.5, slightly below the previous reading of 64.0 points.
EUR/USD Technical
- EUR/USD has support at 1.1800, which has held since April. Below, there is support at 1.1734
- There is resistance at 1.1938 and 1.2010
