- EUR/USD remains stuck below the 50-day moving average despite Brexit optimism.
- A breakout could be seen if the US retail sales data prints below estimates.
EUR/USD failed to close above the 50-day moving average (MA) for the third straight day on Tuesday and remains below the key average amid Brexit optimism and ahead of the US monthly retail sales data.
The pair is currently trading around 1.1030, representing marginal losses on the day and the 50-day MA is located at 1.1038.
Defends key support
The common currency bounced up from 1.0991 on Tuesday, reinforcing the bullish breakout signaled by Friday’s upside break of the trendline connecting June 25 and Aug. 13 highs.
The pair picked up a bid, possibly on the news that the European Union and the United Kingdom (UK) are closing on a Brexit deal.
The bounce, however, stalled at the 50-day MA, possibly due to the selling in the EUR/GBP cross, which fell by 1.35%.
Focus on Brexit and US data
Britain’s Prime Minister Boris Johnson needs the Democratic Unionist Party’s (DUP) support to pass the Brexit accord in Parliament.
The DUP, however, is playing hardball. The party’s leader has denied reports that it has agreed to support an arrangement where Northern Ireland would stay in the UK customs territory but adhere to the EU customs rules on tariffs.
If talks between the DUP and Johnson collapse, the resulting rise in the EUR/GBP pair could bode well for EUR/USD.
That said, the US retail sales need to miss estimates by a big margin for a convincing breakout above the 50-day MA.
The data, due at 12:30 GMT, are expected to show the retail sales growth slowed to 0.3% in September from August’s reading of 0.4%.
A weak data would bolster the dovish Federal Reserve expectations, possibly leading to a broad-based sell-off in the US Dollar.
Technical levels
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