EUR/USD extends its gains to its highest level in two weeks
December 29, 2020
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EUR/USD extended its gains during trading today, Tuesday, in the European market, and recorded the…
EUR/USD Turns Bullish as Analysts Forecast Declining Retail Sales in the US
United States – Retail Sales
On Tuesday, at GMT 12:30 p.m., the US Census Bureau will release the national month-over-month retail sales figure. It measures the changes in the total value of all sales made at the retail level in the country over the past month.
Retail sales data are considered by Forex traders to be the primary gauge of consumer spending and confidence. This is because when consumers are confident about their future financial situation, they tend to spend more.
Last month, the US retail sales value increased by 0.6%. Analysts are expecting that this month, it would likely decrease by -0.2%.
Eurozone – Producer Price Index
On Friday, at GMT 6:00 a.m., the Destatis will release the German Producer Price Index (PPI). It measures the changes in the price of sold goods by the German manufacturers in the previous month.
Manufacturers increase their prices when the cost of production goes up. Hence, CFD traders consider the German PPI to be a leading indicator of the overall German consumer inflation. Also, its consumer inflation situation can have a substantial impact on the valuation of the Euro.
Last month, the German PPI went up by 1.3%. This month, analysts are expecting it to grow at a much slower pace, at 0.8%.
EUR/USD Forecast
Since the end of May 2021, the EUR/USD fell by around 560 pips. Last week, it briefly came close to the 1.1700 level but then started a bullish retracement. Last Friday, it managed to close above the major resistance near the 1.1770 level. This week, so far, the EUR/USD has remained range bound and tested the 1.1770 level several times. Currently, it is trading just above this resistance.
The US retail sales will likely go down by -0.2% over the last month. On the other hand, the German PPI will likely slow down but still have a positive growth of 0.8%. We believe it would set a bullish fundamental outlook for the EUR/USD this week. Therefore, if the EUR/USD closes above the resistance near 1.1770, it would likely attract additional bullish momentum in the market.
Hence, CFD traders should look out for trading opportunities above this major resistance level around 1.1770.
Market Analyst / Trading Consultant . Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes about various tech and financial topics. You can reach him at contact@asifimtiaz.com
