We have indicated that one of the factors that could potentially trigger a top in the Euro is weaker economic data. On Friday, we already had service sector PMI disappoint and today, Eurozone industrial orders fell by a more than expected 4.0 percent.
This was the biggest drop in new orders in 18 months and illustrates the difficulties that the manufacturing sector is facing at the moment and a strong Euro will only make things worse for the export dependent nation. Papers across Europe have headlines screaming about the potential damage that the skyrocketing currency will do to the region?s economy. It will take more than PMI and industrial orders however to make a top in the Euro meaningful. Tomorrow we have the German IFO report. A big drop in business confidence has the significance to take the currency pair back below 1.40 but the surprise may not be big enough since the Belgian manufacturing survey only fell modestly. Meanwhile Switzerland will also be releasing their UBS consumption index. Swiss economic data has recently been surprising to the downside, which explains why EUR/CHF is trading at the top of its month long range.
Written by Kathy Lien, Chief Currency Strategist of DailyFX.com