Bullish view

Bearish view

EUR / USD was held stable early in the session as the market continued to reflect strong US retail sales and weak consumer confidence data. The pair climbed to 1.1600, which was higher than last week’s low of 1.1523.


US Retail Sales and Consumer Sentiment

The United States posted relatively strong retail sales on Friday. Data released by the Census Bureau showed overall sales jumped 0.7% in September from August. This increase was better than the median estimate of -0.2%.

On a year-over-year basis, sales increased 13.9% in September. At the same time, data from the University of Michigan showed that the country’s consumer confidence fell to 71.4 in September, the lowest level since 2011. The drop was partly explained by rising prices. prices of goods, which consumers believe will increase by 4.8% in the coming year.

Notably, US retail sales came days after the US released relatively strong consumer price data. Headline inflation fell from 5.3% to 5.4% in September while core sales rose 4.0%. As such, it appears consumers continue to spend even though prices remain relatively higher.

EUR / USD will react to the current earnings season. Most of the companies that released their results last week beat analysts’ forecasts. For example, on Friday, Goldman Sachs posted strong results, boosted by its investment banking division. Other companies that have performed strongly are Bank of America, Morgan Stanley and JP Morgan. This week, the top companies that will release their results are Philip Morris, Netflix and Johnson & Johnson.

Other key economic figures that will move the EUR / USD will be building permits and housing starts in the United States. Eurostat will also publish the latest euro area inflation data.

EUR / USD forecast

The four hour chart shows the EUR / USD pair formed a double top pattern at 1.1523 last week. In price action analysis, this pattern is usually a bullish sign. The pair also formed a bullish pennant pattern at the 23.6% Fibonacci retracement level.

Like a double bottom, a bullish pennant pattern is usually a sign that the price will continue to rise. It also broke the 25 and 15 period moving averages. Therefore, it is likely that the pair will continue to climb as buyers target the 50% retracement level at 1.1716.


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