“¢ The already weaker USD losses some more ground on weaker retail sales data.
“¢ Sales growth falls short of market expectations; core figures unexpectedly contract.
The EUR/USD pair held on to its strong bid tone through the early North-American session and is now looking to build on the momentum beyond the 1.1600 handle after disappointing US macro data.
The already weaker US Dollar lost some additional ground after the latest US monthly retail sales figures fell short of market expectations and came in to show a modest 0.1% m/m growth in September as against 0.5% expected.
Adding to the disappointment, core retail sales, excluding automobile, unexpectedly contracted by 0.1% as compared to a downwardly revised 0.2% rise recorded in the previous month and kept the USD bulls on the defensive.
With today’s strong up-move, the pair has now recovered all of the Friday’s downtick. It, however, remains to be seen if the pair is able to build on the positive momentum or the up-move once again fizzles out near 55-day EMA amid concerns over Italy’s fiscal policies.
Market participants will keep a close watch on Italy’s 2019 budget approval, reported slipping to Tuesday, which might trigger a clash with the European Commission and eventually keep a lid on any runaway rally for the shared currency.
Technical outlook
Valeria Bednarik, FXStreet’s own American Chief Analyst writes: “The 4 hours chart for the pair offers a neutral stance, as the price is barely recovering above a bullish 20 SMA, pierced during the Asian session, but below the 100 and 200 SMA which maintain their bearish slopes. The Momentum indicator has bounced modestly after hitting its 100 level, lacking strength while the RSI heads nowhere around 54.”
“More relevant, the pair is unable to surpass the 38.2% retracement of its latest daily slide at around 1.1575, the immediate resistance. An acceleration through this last should lead to an advance up to the 1.1620 region, while bears could take over the pair on a break below 1.1520, the 23.6% retracement of the same rally,” she added further.
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