Euro’s gains narrow following weaker-than-expected German Factory Orders

• Can EUR/USD retain modest daily gains below 1.1250 as its advance for the week so far holds near 0.8%?
• Support from risk-on sentiment and cheaper Oil was partly countered by German Factory Orders falling short of forecasts.
• Wednesday’s US ADP employment and Services activity figures reinforced evidence of robust momentum in the US economy.

Gains in the Euro (EUR) against the US Dollar (USD) extended into a second day on Thursday as sharply lower Oil prices lent support. However, weaker-than-forecast German Factory Orders prompted a retreat from the session’s highs. Having eased from around 1.1270, EUR/USD is trading just under 1.1250, while remaining on course for its strongest weekly performance in three months.

A rebound in German Factory Orders fell short of forecasts, according to figures published earlier on Thursday. Orders increased 4.4% in September after falling 10.1% in August, against expectations of a 4.8% rise. On a year-on-year basis, growth edged up to 3.3% from August’s 3.2%.

How are US elections driving Oil lower and easing pressure on Eurozone economies?

The steep fall in Oil prices after the US midterm election outcome has supported the common currency. Over the past two days, Brent Oil has lost about $20 a barrel to trade near $93.00, easing some pressure on the Eurozone’s oil-importing economies. The decline comes amid hopes that diminished support will compel US President Donald Trump to seek a way out of the conflict.

While Trump defended the intervention in Iran on Wednesday, Vice President JD Vance stated in a post on X that the war was the principal cause of the Republican defeat and that President Trump had recognised this. 

Further support for the Euro came from preliminary Eurozone figures published on Wednesday, which showed consumer inflation picking up to 4% year-on-year in October. The acceleration added to pressure on the European Central Bank (ECB) to continue tightening monetary policy.

The US Dollar failed to gain support from Wednesday’s US releases, despite further signs of economic strength. Net job additions reached 86K in October, according to ADP Employment data, exceeding the forecast increase of 69K. Although the ISM Services Purchasing Managers Index (PMI) fell marginally short of expectations, its level remained consistent with firm activity.