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Forex: EUR/USD eases after Germany factory orders

The EUR/USD went as high as 1.3044 on the improving yields seen on Spain and France's bond auction, but failed to extend higher. At the moment of writing, the pair is retracing the European morning gains and approaching the 1.3000 mark after the release of Germany factory orders.

German factory orders dropped -1.9% (MoM) in January, instead of rising -0.5% as expected. The annualized figure fell further, from -1.9% to -2.5%, instead of improving to 1.6% as predicted.

The 10-year Letras narrowed its yields, from 5.202% to 4.917%, in today's €2.435B bond auction. Spain also sold €569M of 3-year debt (from 2.713% to 2.632%) and €2.026B of 5-year debt (from 4.123% to 3.572%). France sold €7B of 10-year debt at 2.1% yield, lower than the previous auction (2.3%).

“The bias here remains negative after the peak at 1.3075, currently targeting 1.2880 support zone”, wrote Deltastock.com analyst Stoyan Mihaylov, pointing to 1.3075 as key on the upside to signal a bottom at 1.2960.

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Year-over-year German Factory Orders fell 2.5% in January, down from the 1.9% drop in December, the Deutsche Bundesbank reported today. Market consensus pointed to a 1.6% increase.
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Later today in the UK, “we expect no change in policy from the BoE today (as does Bloomberg consensus), however we underscore that the risks to this view are high. The BoE minutes from the February meeting showed that three of the nine-strong MPC Committee – including the Governor himself – voted for additional asset purchases meaning just two other MPC members are needed to join King, Fisher & Miles for further QE to be sanctioned.” notes Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank.
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