EUR/USD is having a bad week. The blow it got from American Non-Farm Payrolls continued with internal problems in Europe, and American retail sales send it further down. It may be getting close to a breakout.
Update 15:00 GMT: American Consumer Sentiment was also better than expected: 73.4 points instead of 68.6. EUR/USD is already down to 1.4650, and is quickly approaching the support line mentioned ahead in the article.
American Retail Sales came out better than expected – a rise of 1.3%, more than double the early expectations that talked about a rise of 0.6%. Also Core Retail Sales, no less important, rose by 1.2%, exceeding early expectations of a 0.5% gain.
American Retail sales move the forex markets, especially on Friday, near the close of the market. Last week at the same time, American Non-Farm Payrolls were far better than expected and sent the dollar up across the board. The risk factor was out of the game, and the dollar finally gained on good data.
EUR/USD fell from 1.4770 to 1.4700 after the release.
EUR/USD is one of the biggest movers on the dollar’s mood. The fall stopped above 1.48, which was the bottom border of the previous range.
But this week, EUR/USD also suffered from internal problems. There is high uncertainty if Greece can pay its debt. The credit crunch isn’t isolated to Dubai.
Bad news also came from the other flank of the continent: Spain got a severe credit downgrade. While Germany and sometimes France receive most of the focus in the continent, they are not alone in the Euro zone. While Germany and France are slowly recovering, other countries, such as Spain, Greece and also Ireland, still have their problems, and this weighs on the Euro as well.
As I’ve mentioned in the weekly EUR/USD forecast, the next support line is 1.4626, which was a swing low at the beginning of November. The pair already reached a low of 1.4666 earlier this week.
Below that line, the range of 1.4444 to 1.4480 lies. EUR/USD broke the strong 1.4444 resistance line at the beginning of September, and never dipped below 1.4480 since then. Check out Casey Stubbs’ analysis as well.
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