EUR/USD Settles on Higher Range on Good Figures

German factory orders and retail sales for the euro-zone came out better than expected, and they push euro dollar to a higher, though narrow range. “Strong  vigilance” is getting closer.

Factory orders are recovering in Germany: after a horrible report of a drop of 4% last month, they rose by 2.8% this time. This exceeded expectations for a rise of 2.1%. In addition, the figure reported last month was revised to a drop of only 2.7%. So all in all, they remained almost unchanged, making the picture much better.

Earlier, euro-zone retail sales rose by 0.9%, more than double the early expectations for a rise of 0.4%. This was also good news after the drop of 0.9% last month.  

Both figures have helped strengthen the notion that Jean-Claude Trichet will signal a rate hike in July, though this is still uncertain.

The key for the euro this week will be the opening words of Jean-Claude Trichet at the press conference following the rate decision. If he says “strong vigilance” about inflation, the euro will rock. A repeat of “closely monitoring” will mean another delay.

EUR/USD is at 1.4670, finally managing to settle above the 1.4650 line. Resistance is at 1.47, making the move quite limited. Further lines are 1.4775 and 1.4882. Below 1.4650, 1.4580 provides further support.

For more on EUR/USD, see the euro to dollar forecast.