- EUR/USD struggles to capitalize on its intraday uptick amid some buying around the USD.
- The better-than-expected German Factory Orders data also does little to provide impetus.
- The fundamental backdrop supports prospects for some meaningful corrective pullback.
The EUR/USD pair surrenders its modest intraday gains to the 1.0520 area and refreshes the daily low during the early European session. Spot prices remain on the defensive below the 1.0500 psychological mark and move little following the release of better-than-expected German data.
The latest data published by the Federal Statistics Office showed that German Factory Orders rose 0.8% in October against the 0.2% decline estimated and the 4.0% fall recorded in the previous month. The data, however, did little to impress bullish traders or provide any meaningful impetus to the EUR/USD pair amid some follow-through US Dollar buying.
In fact, the USD Index, which measures the greenback’s performance against a basket of currencies, is seen building on the overnight bounce from over a five-month low and acts as a headwind for the EUR/USD pair. The incoming stronger US economic data fuels speculations that the Fed may raise interest rates more than projected and offers support to the USD.
Against the backdrop of the upbeat US monthly jobs report released on Friday, the Institute for Supply Management (ISM) reported on Monday that the US Service PMI unexpectedly climbed to 56.5 in November. This points to a resilient US economy, despite rising borrowing costs, and validates expectations that the Fed will continue to tighten its monetary policy.
Furthermore, the recent less hawkish remarks by European Central Bank (ECB) policymakers, backing the case for a 50 bps rate hike in December, favour the EUR/USD bears. That said, it will still be prudent to wait for strong follow-through selling before confirming that spot prices have topped out in the near term amid a relatively thin US economic docket.