The euro was trading with a slight change against the US dollar on Monday, as durable goods orders report from the United States was in investorsfocus.
EUR/USD reached its highest point on Monday at 1.3389 1:12 GMT, after which consolidation followed at 1.3377. Support was likely to be found at August 23rd low, 1.3322, while resistance was to be seen at August 21st high, 1.3426.
Last Friday the Department of Commerce said that new home sales in the United States decreased significantly to their lowest level in the past nine months in July, giving boost to concerns that rising mortgage rates may obstruct US housing market recovery. Sales of new homes tumbled by 13.4% to reach annual 394 000 units in July compared to June. The recorded drop was the strongest in three years, as sales hit their lowest point since October 2012. Experts had anticipated that new home sales will reach 490 000 units. June’s figure was revised down to 455 000 from 497 000 units previously.
This data came a day after another report showed an increase in weekly US initial jobless claims, as both indicators brought to life again the uncertainty over the future of Federal Reserve Banks stimulus program.
Today a survey of 220 experts by the National Association for Business Economics (NABE) showed little probability that Fed will begin tapering of its asset purchases this September, as it is expected that US trade deficit may appear to be an economic challenge during the next two decades. Only 10% of the surveyed economists project a scale back in monetary stimulus at the next FOMC meeting, due within less than three weeks. 57% of the surveyed expressed opinion that the current course of Feds monetary policy was appropriate.
Later in the trading day the United States was to publish data on durable goods orders. Median estimates showed a 4.0% drop in July compared to June, after the 3.9% gain in June compared to May. As a major component of the total factory orders, better than projected results would certainly boost the appeal of the greenback.
In the mean time, on Friday Euro zones Economic Sentiment Indicator (ESI) showed improvement in its value to -15.6 in the month of August, outperforming preliminary estimates of a lesser increase to -16.5, after in July the index stood at -17.4, which favored support for the euro.
Additionally, the common currency was boosted after a senior European Central Bank official stated on Friday that he did not see many arguments for additional cut in interest rates, following the most recent series of economic data, released from the euro bloc, which showed improvement in economy.