Forex Technical Update
- Retail sales numbers came in better than expected, with the headline number at 0.5% for July. The forecast was 0.4% and June's data was revised from 0.1% to 0.3%. Core retail sales was also 0.5%. The forecast was 0.2%, and June's number was revised up from 0.0% to 0.2%.
- This invites some risk appetite, which is bullish for the EUR/USD.
- Although this is good for the US economy, risk-on trading actually creates outflow from the USD, which has stood as one of the safe haven currencies.
- The market has found a resistance pivot at the 1.4280 level. The initial reaction after the better-than-expected retail sales figures came out was an attempt to break this resistance.
- Now a break above 1.4280-1.4300 area, opens up the upper range resistance in the 1.4370-1.44 area.
- Looking at the 15-min chart, we want to see the RSI break above 70. Also, we don't want a throwback to slide back below the 1.4220 pivot.
- In fact, if the market fails to break above 1.43, then falls back below 1.4220, we are likely going back down towards 1.4150-1.4170 support area.
- This is all choppy, range-bound noise. A trend is non-existent until we break above 1.44 or below 1.40.
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Fan Yang CMT
Chief Technical Strategist