EUR/USD Return to $1.0750 in the Hands of German Factory Orders

It is another busy day ahead for the EUR/USD. German factory orders will draw plenty of interest going into the European session. In March, German factory orders tumbled by 10.7%. Another sizeable fall in orders would raise the prospects of another economic contraction in Q2.

Economists forecast factory orders to fall by 2.2% in April, which would pressure the EUR/USD.

Later in the session, euro area retail sales figures will also move the dial. The current inflationary environment weighed on consumer spending in March. While economists forecast a modest 0.2% increase in April, an unexpected fall in retail sales would add more pressure on the ECB to hit the pause button.

With the economic calendar on the busier side, investors should monitor central bank chatter throughout the Monday session. However, no ECB members are on the calendar to speak today, leaving commentary with the media to influence.

While no ECB members are speaking, the ECB will release the ECB Consumer Expectation Survey results that need consideration.

EUR/USD Price Action

This morning, the EUR/USD was up 0.06% to $1.07183. A mixed start to the day saw the EUR/USD fall to an early low of $1.07074 before rising to a high of $1.07246.

Technical Indicators

Resistance & Support Levels

The EUR/USD has to avoid the $1.0703 pivot to target the First Major Resistance Level (R1) at $1.0732. A move through the morning high of $1.07246 would signal a bullish session. However, the EUR/USD needs central bank commentary and economic indicators to support a breakout session.

In the case of an extended rally, the bulls will likely test the Second Major Resistance Level (R2) at $1.0751. The Third Major Resistance Level (R3) sits at $1.0799.

A fall through the pivot would bring the First Major Support Level (S1) at $1.0684 into play. However, barring a risk-off-fueled sell-off, the EUR/USD pair should avoid sub-$1.0650. The Second Major Support Level (S2) at $1.0655 should limit the downside. The Third Major Support Level (S3) sits at $1.0607.

Looking at the EMAs and the 4-hourly chart, the EMAs sent bearish signals. The EUR/USD sits below the 50-day EMA ($1.07299). The 50-day EMA pulled back from the 100-day EMA, with the 100-day EMA easing back from the 200-day EMA, delivering bearish signals.

A move through the 50-day EMA ($1.07299) and R1 ($1.0732) would give the bulls a run at R2 ($1.0751) and the 100-day EMA ($1.07736). However, failure to move through the 50-day EMA ($1.07299) would leave S1 ($1.0684) in view. A move through the 50-day EMA would send a bullish signal.

The US Session

It is a quiet session on the US economic calendar. There are no economic indicators to move the dial. The lack of economic indicators will leave Fed chatter to influence.

On Monday, the US ISM Non-Manufacturing PMI numbers provided the Fed doves with more reason to push for a June pause. According to the CME FedWatch Tool, the probability of a 25-basis point June interest rate hike slipped from 25.3% to 21.2% on Monday versus 64.2% one week earlier.