- Mixed economic data pointed to pockets of weakness within the world’s largest economy.
- US factory orders showed a 1.2% increase in August, surpassing the anticipated 0.2% rise.
- The Eurozone reported a much steeper decline in retail sales than expected for August.
On Thursday, the EUR/USD outlook was bullish as the euro rose with the dollar’s decline in response to the retreating US Treasury yields.
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The decline reflected mixed economic data that pointed to pockets of weakness within the world’s largest economy. Consequently, it reduced the likelihood of the Federal Reserve implementing another interest rate hike before the end of the year.
On Wednesday, the dollar index, which gauges the greenback’s performance against six major currencies, registered a 0.3% drop to 106.69, relinquishing some of its recent gains. This decrease followed disappointing US private payroll data from the ADP National Employment Report. Nevertheless, the index remained close to its nearly 11-month high of 107.34, achieved in the previous session.
However, the dollar managed to recover partially from its losses when US factory orders showed a 1.2% increase in August, surpassing the anticipated 0.2% rise.
Meanwhile, the euro gained, although it remained relatively close to its Tuesday low of $1.0448, which marked its weakest level since December. This decline in the euro sparked discussions of a potential further drop to $1.
Still, the euro rose on Thursday despite the Eurozone reporting a much steeper decline in retail sales than expected for August. Moreover, there is a higher likelihood of the bloc’s economy contracting in the previous quarter.
EUR/USD key events today
Although the Eurozone will not release any major reports today, the US will release one important one.
- The initial jobless claims report.
EUR/USD technical outlook: Bulls challenge prevailing bearish bias.
On the charts, the EUR/USD price trades at a pivotal level slightly below the 30-SMA. At the same time, the RSI trades near the pivotal 50 line, separating bullish from bearish territory. Therefore, although the bias is down, bulls are challenging the downtrend.
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Currently, the price is trading in a tight consolidation between the 30-SMA resistance and the 1.0500 support level. A breakout above the resistance would signal a bullish takeover, allowing the price to retest the 1.0600 resistance. On the other hand, a breakout below the support level would see bears retesting the 1.0450 support level.
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Saqib Iqbal
