EUR/USD retreats back to 1.09, shedding 100 pips since its peak performance on Monday at 1.1008, when it added another tranche of gains at the beginning of the week to its stellar move following the poor US Nonfarm Payrolls (NFP) report on Friday. Markets were spooked by recession fears, sparking an equity crisis in Asia where the two major Japanese indices, the Nikkei and the Topix, lost over 10% of value in just one trading day. Markets are recovering on Tuesday, with the US Dollar (USD) gaining against its peers and recovering most of the incurred losses from Monday. 

The EUR/USD correction on Tuesday does not look to be very big or quick. Germany’s June Factory Orders data underpins the Euro (EUR) after a stellar performance. Expectations were for a very mild 0.8% month-over-month increase in June after a decline of 1.6% in May. The data exceeded expectations by coming in at a positive 3.9%. 

Overnight, President of the Federal Reserve Bank of Chicago Austan Goolsbee and San Francisco Federal Reserve President Mary Daly calm traders' nerves in the market. Both US Federal Reserve (Fed) officials said that a few softer numbers are no reason for concern and that the job market is still holding strong, with no substantial and widespread permanent layoffs taking place. Recession fears may have eased for now, though markets are starting to get afraid that the Fed has overpromised on rate cuts and might underdeliver when the moment is there to act. 

Daily digest market movers: EUR/USD back to basics

• On Tuesday, the Asian session started off quite quickly, with Japan’s Nikkei and Topix equity indices hitting their circuit breakers. This time, this was due to substantial moves to the upside, in contrast to their sharp declines earlier this week. 
• The US Dollar sees some strength across the board, with the USD/JPY pair being the biggest outlier. The US Dollar (USD) outperforms the Japanese Yen (JPY) by over 1% on Tuesday.
• On the US political front, current Vice President Kamala Harris was officially nominated as the Democratic candidate for the upcoming Us presidential elections in November. 
• On the old continent, German Factory Orders data for June were an upbeat surprise, increasing by 3.9% month-over-month after the -1.6% registered in May. Additionally, there were some lighter but still positive numbers for the German Construction Purchase Managers Index (PMI) for July, which ticked up from 39.7 to 40.0. Despite the uptick, the PMI number remains stuck in contraction. 
• France’s private sector payrolls were unchanged in the second quarter. The preliminary number came in at 0.0% against 0.3% for the final reading of the first quarter.
• European Retail Sales for June declined from 0.1% in May to -0.3% in June. The yearly number went from a revised 0.5% last year to -0.3%. 

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