EUR/USD Stabilizes Higher Following German Factory Orders

Europe’s largest economy continues to push forward – factory order grew by 2.4%, 4 times the early expectations. This sends the EUR/USD further above, at a safer distance from the critical resistance it broke earlier.

Germany’s economy is healthy. Very healthy. The Euro-zone’s powerhouse saw another strong month of growth in factory orders, 2.4%. This follows a rise of 3.1% last month, also revised to the upside from 2.9% initially reported.

This German strength is totally different from the situation in Portugal, Ireland and Greece, which are struggling with their debt, and see no real growth in the near and far future. As the ECB is more tuned towards Germany, this figure helps the Euro.

EUR/USD rises and gets further away from the all-important line of 1.4282 it broke earlier. It’s important to note that after the breakout, Euro/Dollar descended and got too close to this line again, making the break a false one.

But this excellent figure from Germany helpes the pair stabilize above 1.43, at a safer distance from this line. We can confirm the breakout only if it holds throughout the US session. This line, which was the peak in November, was closely watched by everybody.

EUR/USD last traded at these levels back in January 2010, about 15 months ago. The next level of resistance is only at 1.4450, followed by 1.4580. 1.4282 now turns into support, followed by 1.4160.

For more levels, analysis and upcoming events, see the EUR/USD Forecast.

The big event is tomorrow – the rate decision. The ECB is expected to raise the European Minimum Bid Rate by 0.25%. But this is far from being 100% certain. There’s also a chance of a 0.50% hike.

In case of an expected hike of 0.25%, the words of ECB president Jean-Claude Trichet in the press conference will make the difference for the Euro.

Trichet might hint about future moves, a series of hikes, or he may hint a pause – a “wait and see” policy. See the ECB Preview for more.