EUR/USD retreats to 0.9950 on softer German Factory Orders, focus on US PMI, ECB

• EUR/USD pares daily gains after downbeat German data.
• Germany’s Factory Orders growth dropped to -13.6% YoY in July.
• Risk-on mood, firmer yields add strength to pair’s recovery moves.
• Full markets, US ISM Services PMI can entertain traders ahead of Thursday’s ECB.

EUR/USD fades upside momentum after softer economics from the bloc’s powerhouse Germany. Even so, the major currency pair prints the biggest daily gains in a week amid risk-on mood. That said, the quote declines to 0.9950 heading into Tuesday’s European open, after refreshing intraday high to 0.9970 earlier in the day.

Germany’s Factory Orders for July marked a contraction of 13.6% YoY versus -6.1% expected and -9.0% prior on the non-seasonally adjusted basis.

It’s worth noting that the chatters surrounding more aid packages to propel economic recovery seem to have favored the optimists during the full markets. That said, the incoming UK PM Liz Truss is up for a £130 billion energy plan while the People’s Bank of China (PBOC) cuts the Reserve Requirement Ratio (RRR). Further, politicians from Germany/Eurozone are all in to battle with the recession woes with a heavy push to defend energy companies and stock for winters.

Also favoring the pair buyers could be the easing in the hawkish Fed bets. As per the latest read, the CME’s FedWatch Tool hints at the 60% chance of the Fed’s 0.75% rate hike in September, versus over 75% marked in the previous week.

While portraying the mood, the US 10-year Treasury yields rise 2.5 basis points (bps) to 3.21% by the press time. In doing so, the US benchmark bond coupons reverse Friday’s losses. Also portraying the risk-on mood could be the 0.50% intraday gains of the S&P 500 Futures, as well as a pullback in the US Dollar Index (DXY) from a 20-year high marked the previous day.

Moving on, EUR/USD traders may witness lackluster moves ahead of the ISM Services PMI for August, expected 55.5 versus 56.7 prior. However, major attention will be given to Thursday’s European Central Bank (ECB) Monetary Policy Meeting announcements as the bloc’s central bank is again up for 0.50% rate hike despite the recession fears and energy crisis.

Technical analysis

EUR/USD buyers need to cross the monthly resistance line, around the 1.0000 psychological magnet by the press time, for conviction. That said, the 10-DMA hurdle near 0.9980 restricts the immediate upside moves of the pair.