Trading News Events: U.S. Durable Goods Orders

• U.S. Durable Goods Orders to Contract for Third Straight Month.
• Non-Defense Capital Goods Orders ex Aircrafts to Expand for Fifth Time in 2014.

Another 0.6% contract in orders for U.S. Durable Goods may generate a more meaningful rebound in EUR/USD as it dampens the growth and inflation outlook for the world’s largest economy.

What’s Expected:

Why Is This Event Important:

The threat of a slower recovery may further delay the Fed’s normalization cycle as Chair Janet Yellen remains in no rush to remove the zero-interest rate policy (ZIRP), and the dollar may face a larger correction over the near-term should interest rate expectations falter.

Nevertheless, the ongoing improvement in consumer confidence may generate a better-than-expected print, and a rebound in demand for U.S. Durable Goods may heighten the bullish sentiment surrounding the dollar as the Fed is widely expected to raise the benchmark interest rate in 2015.

How To Trade This Event Risk

Bearish USD Trade: Orders Contract 0.6% or Greater

• Need to see green, five-minute candle following the release to consider a long trade on EURUSD
• If market reaction favors a bearish dollar trade, buy EURUSD with two separate position
• Set stop at the near-by swing low/reasonable distance from entry; look for at least 1:1 risk-to-reward
• Move stop to entry on remaining position once initial target is hit; set reasonable limit

• Need red, five-minute candle to favor a short EURUSD trade
• Implement same setup as the bearish dollar trade, just in the opposite direction

EUR/USD Daily Chart

USD/CAD Daily Chart

XAU/USD Daily Chart

• Will watch the November high (1.2599) as EUR/USD holds above the monthly low (1.2356).
• Interim Resistance: 1.2610 (61.8% expansion) to 1.2620 (50% retracement)
• Interim Support: 1.2280 (100% expansion) to 1.2300 pivot

EURUSD M5: 56 pips price movement by USD - Durable Goods Orders news event: