Euro drops on weak Germany factory orders

Fiona Cincotta
By :  ,  Senior Market Analyst
The euro skidded lower across the day following dire German factory order data and amid a strengthening dollar. Factory order’s in Europe largest economy fell -4.2% month on month in February, significantly worse than the 0.3% increase that analysts had pencilled in. German factory orders are down -8.4% on an annual basis. 

The minutes from the ECB meeting, showed that the Governing Council were happy to commit to keeping rates on hold until the end of the year. However, they were not willing to extend guidance beyond this due to high levels of uncertainty surrounding the economic outlook. The euro shrugged off the minutes from the March ECB meeting. The market is not pricing in a rate hike from the ECB until 2021

Dollar rallies on evidence of labour market strength

On the other side of the equation the dollar was on the rise. Jobless claims hitting their lowest level since 1969 indicate that the US labour market remains strong despite concerns over slowing economic growth. Claims dropped to 202,000 for the week, a 49-year low. 

Investors will turn their attention towards tomorrows NFP. Ahead of the reading we can expect caution to dominate. 170K jobs are expected to be created in March, after February’s shock of just 20k.


The EUR/USD is hovering around a 4-week low versus the dollar, as it heads towards $1.12. A strong NFP figure could see the EUR/USD drop to support at $1.1180 before heading towards $1.1175 and 1.1118. On the other hand, another month of soft numbers could see the EUR/USD rally towards $1.1255 before $1.1285.

Related tags: Dollar Euro Forex EUR

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