Euro lingers near 3 month low

The Euro is hovering around the 1.0730 which is near the lowest level in three months after downbeat German data published earlier today which threw into question the ability of the European Central Bank to raise interest rates any further.

German Factory Orders slumped the most since April 2020 with -11.7% YoY figures compared to -4.0% expected and upwardly revised prior numbers of 7.6%. That said, the monthly statistics also declined heavily with the -10.5% mark versus 3.3% prior (revised from 3.0%).

This follows on from the previous day’s Eurozone Producer Price Index (PPI) for July and the economic fears cited in the European Central Bank’s (ECB) monthly survey of consumer expectations for inflation.

Upbeat details of the US Factory Orders and comments from the Federal Reserve (Fed) officials defend the US Dollar bulls even as a retreat in the yields allows the Greenback buyers to take a breather. On Tuesday, the US Factory Orders for July dropped to the lowest since mid-2020 while posting -2.1% MoM figures versus -0.1% expectations and 2.3% previous growth.

 However, the orders excluding transport rose 0.8% MoM, Shipments of goods stayed firmer and inventories marked the first increase in three months. That said, Federal Reserve (Fed) Governor Christopher Waller’s defence of hawkish monetary policy during a CNBC interview and Cleveland Federal Reserve President Loretta Mester’s rejection of rate cuts Favor the US Dollar bulls.

Elsewhere, concerns about more stimulus for China’s real estate sector, per the Chinese media, seem to have fuelled the property shares, especially backed by Country Garden’s avoidance of default. The same appears as the key catalyst challenging the market’s previous risk-off mood and putting a floor under the EUR/USD price.

Against this backdrop, stock futures in the US and Europe print mild losses while tracing the Wall Street benchmarks whereas the US Dollar Index (DXY) seesaws at the highest level since March 15, dicey near 104.80 at the latest.

Looking further ahead today, the main drivers of the EUR/USD currency pair will be the release of ISM services PMI numbers from the US which are a key indicator of consumer