Durable goods orders in the world's largest economy rose 2.7 percent in January after falling a revised 0.4 percent the month prior amid economists' expectations of 2.8 percent. Indeed, the reading marks the highest level since September 2010; however, the greenback showed a muted response subsequent to the release as markets remain concerned with the tensions in the Middle East.
Taking a look at the breakdown of the report, durable goods excluding transportation sank 6.9 percent in January amid forecasts of a 1.0 percent decline. Meanwhile, shipments and inventories climbed 0.3 and 0.7 percent respectively.
Looking ahead, USD traders will shift their focus to the new home sales report for the month of January. Despite the outcome of the release, traders should not overlook the developments in the Middle East which have lead safe haven currencies to rally as of late.
EURUSD 4 Hour Chart
Source: FXCM's Strategy Trader
Taking a look at the 4 hour chart of the EURUSD, the pair managed to break above its descending trend line dating back from November 2010, while downside risks remain capped by the 1.36 area. If prices can manage to break and close above 1.38 today, the next level of resistance will be 1.40 which coincides with the falling weekly trend line from July 2008. It is also worth noting that our speculative sentiment index stands at -2.13, and signals for additional gains in the pair.
Written by Michael Wright, Currency Analyst
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Michael Wright is the author of FX Headlines, Fundamentals vs. Technical's, Weekly Spotlight, Intraday Trading, and Forex Trading Weekly Forecast