Euro drifts lower as investors’ cautiousness offsets upbeat German factory data

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The Euro (EUR) shows a moderately negative stance against the US Dollar (USD) on Monday, in a calm start of the week.

EUR/USD eases to levels near 1.1400 after failing to extend gains beyond 1.1470 last week.
German Factory Orders for May beat expectations, and investors' sentiment improves significantly.
Fresh concerns about the Middle East peace deal are offsetting the impact of strong Eurozone figures.

The Euro (EUR) shows a moderately negative stance against the US Dollar (USD) on Monday, in a calm start of the week. German Factory Orders figures released earlier on the day beat expectations, but ongoing concerns about the fate of the US-Iran peace process are weighing on risk sentiment and underpinning support for the Greenback.

The EUR/USD pair is trading at the 1.1415 area at the time of writing, after a failure at the 1.1470 area late last week, while the US Dollar Index (DXY), which measures the value of the USD against a basket of six peers, appreciates beyond the 101.00 level, after bouncing from the 100.60 area on Friday.

German factory data, investors' sentiment improve

In the Eurozone, data from Germany beat expectations, with Factory Orders rising 1.9% MoM in May, well above the 1.2% increase expected, partially reversing the 3.2% contraction seen in April. Later on the day, the Eurozone Sentix Investor Confidence index for July improved to -3.1, its best reading since the beginning of Iran's war and a significant recovery from the -13.4 print seen in June.

Investors’ enthusiasm about these figures, however, has been dampened by fresh concerns about the US-Iran peace deal. On the one hand, Iranian authorities have reiterated their willingness to collect fees from vessels crossing the Strait of Hormuz, a possibility flatly rejected by the US, while on the other, Iran and Israel have escalated their rhetoric, casting shadows about the fate of a fragile ceasefire.

Later on the day, Eurozone’s Producer Price Index (PPI) and Retail Sales data will provide further clues about the region’s economic momentum. In the US, the focus will be on the ISM Services Purchasing Managers’ Index (PMI), which is expected to confirm the picture of a resilient US economy and is likely to frame the speech of Fed Governor Christopher Waller, due later on the day.

Economic Indicator

Factory Orders s.a. (MoM)

The Factory orders released by the Deutsche Bundesbank is an indicator that includes shipments, inventories, and new and unfilled orders. An increase in the factory order total may indicate an expansion in the German economy and could be an inflationary factor. It is worth noting that the German Factory barely influences, either positively or negatively, the total Eurozone GDP. A high reading is positive (or bullish) for the EUR, while a low reading is negative.

Economic Indicator

Sentix Investor Confidence

With among 1600 financial analysts and institutional investors, the Sentix Investor Confidence is a monthly survey which shows the market opinion about the current economic situation and the expectations for the next semester. The index, released by the Sentix GmbH, is composed by 36 different indicators. Usually, a higher reading is seen as positive for the Eurozone, that means positive, or bullish, for the Euro, While a lower number is seen negative or bearish for the unique currency.