The euro declined slightly following data showing that industrial orders in Germany unexpectedly fell in June, even as the outcome of the trade deal between Europe and the U.S. remained uncertain. This marks the second consecutive month of decline.

This trend is raising concerns among economists, as Germany is the largest economy in Europe and one of the key drivers of global trade. The decline in industrial orders may indicate a slowdown in German economic growth, which in turn could negatively affect the overall economic outlook for the eurozone. Analysts attribute the decline to several factors. First, uncertainty surrounding trade policy between the U.S. and Europe is curbing corporate investment activity. Companies are wary of potential trade barriers and tariffs, prompting them to delay major orders and projects. Second, the economic slowdown in China—one of Germany's largest trading partners—is also weighing on demand for German goods. Weaker growth in the Chinese economy is reducing imports, which in turn affects German exporters.

The report showed that the volume of new orders fell by 1% compared to May, while analysts had expected an increase of 1.1%. The statistics office sharply revised the previous month's figures, now showing a decline of just 0.8%, which suggests a delayed inflow of large transportation-sector orders.

Domestic demand remains the only driver of growth for now. Nonetheless, this highlights the fragile state of the economy after a recession that lasted through most of the previous two years. While business confidence has gradually improved and industrial output is increasing, the sharp rise in U.S. tariffs is now a reality.

"Given the persistently high level of trade and geopolitical uncertainty, it is not surprising that order volumes remain highly volatile," the Ministry for Economic Affairs said in a statement. "Going forward, the sector is likely to face reduced external demand due to high tariffs on exports to the U.S., which appear likely to remain in place."

Many economists expect quarterly GDP to remain flat in the third quarter before gaining momentum thanks to increased infrastructure and defense spending. Following an annual growth rate of 0.3% this year, a 1.0% expansion is forecast for 2026.

Meanwhile, the government's fiscal pledges and investment plans by several major German companies—totaling at least 100 billion euros—offer hope for an acceleration in growth. Machinery manufacturers, who form the backbone of Germany's industrial sector, reported a sharp increase in orders from the eurozone in the first half of the year, suggesting that demand is gradually recovering following trade tariff disruptions. Under the agreement reached at the end of last month, most German exports to the U.S. are now subject to 15% tariffs, although talks are ongoing regarding exemptions for certain goods.

EUR/USD Technical Outlook

At the moment, buyers need to focus on reclaiming the 1.1600 level. Only then can they target a test of 1.1640. From there, a move to 1.1665 is possible, although this would be difficult without support from large players. The most distant target is the 1.1690 high. In the event of a decline, significant buyer activity is expected only near the 1.1555 level. If there is no interest at that level, it may be better to wait for a retest of the 1.1518 low or consider opening long positions from 1.1479.

GBP/USD Technical Outlook

For pound buyers, the immediate target is to break above the nearest resistance at 1.3325. Only then can they aim for 1.3375, although breaking through that level will likely be difficult. The most distant target is the 1.3425 level. If the pair declines, bears will attempt to regain control at 1.3290. A successful breakout below that range would deal a serious blow to bullish positions and could push GBP/USD down to the 1.3255 low, with the potential for an extension to 1.3217.