Markets

Breakdown of the latest developments on the global exchanges
Oct 16, 2020, 1:57 PM GMT
#Economics

Better-Than-Expected Retail Sales Data in the US Reinvigorates the Greenback

The Census Bureau in the US just released the retail sales data for September. According to the findings of the economic report, sales in the retail sector reached 1.9 per cent over the previous month.

These results far surpassed the consensus forecasts, which were projecting a marginal improvement of 0.1 per cent from a month prior. Thus, the market was bracing for a muted increase to 0.7 per cent.

This is more than welcoming news for the American economy, whose tentative recovery was put into question recently following Donald Trump's dubious decision to postpone talks of fiscal stimulus for after the elections.

The overall market surprise is further bolstered because of the subdued increase in consumer prices in September that was registered earlier this week. All of these developments seem to suggest that the consumer confidence in the US remains unimpeded by the turbulent run-up to the elections and the escalating coronavirus crisis.

The greenback reacted positively to the news because of the reinvigorated investors' sentiment. As can be seen on the 4H chart below, the EURUSD has been establishing a potential flag pattern over the last several days. However, a renewed depreciation of the dollar would mean a continuation of the broader uptrend's development.

The recent rebound from the support-turned-resistance level at 1.17550 confirms the strong bearish pressure in the market, which could be invalidate provided that the price manages to break out above the Flag's upper boundary.

Meanwhile, the price remains concentrated below the 100-day MA (in blue) and the 50-day MA (in green). If this relationship is preserved in the near future, market bears would have more reasons to expect sustained price depreciation next week.

A potential rebound from the two moving averages would signify intensified bearish commitment in the market, in which case the subsequent dropdown would likely head towards the Flag's lower boundary.