Breakdown of the latest developments on the global exchanges
Nov 16, 2021, 4:10 PM GMT

U.S. Consumption Nearly Doubled in October, USDCHF Set for a Correction

U.S. Consumption Nearly Doubled in October, USDCHF Set for a Correction

The underlying rally of the U.S. dollar was bolstered earlier today following the release of the October retail sales data. The greenback looks poised to continue climbing in the near term, the likelihood of which is examined in greater detail in our latest EURUSD analysis.

The U.S. Census Bureau just revealed that consumption had nearly doubled in October, inspired by the recent uptick in headline inflation. The jump in retail sales was above the expectations of the consensus forecasts. This had a positive impact on the rallying greenback in the short term.

USDCHF 4H Price Chart

As can be seen on the 4H chart above, the USDCHF is in the process of establishing a new 1-5 impulse wave pattern, as postulated by the Elliott Wave Theory. This bullish 1-5 pattern emerged following the completion of the preceding bearish 1-5 structure.

Presently, the upswing appears to be denied at the 23.6 per cent Fibonacci retracement level at 0.92850, which underpins a major resistance area just below it. A potential reversal from this threshold would likely be followed by a subsequent dropdown to the 38.2 per cent Fibonacci at 0.92340.

The possibility for such a development is highlighted by the emergence of a Shooting Star, which represents a classic reversal indication, at the 23.6 per cent Fibonacci

Consumption nearly doubled in October

U.S. MoM Retail Sales

According to the findings of the Census Bureau, retail sales advanced by 1.7 per cent in October, above the market forecasts of 1.3 per cent. This measures a significant increase from a month prior when consumption was reported at 0.8 per cent.

The heightened consumer demand is inlined with the significant growth in employment that was recorded over the same period, as the general economy continues to expand.