iPad Pro section at the Apple store in Aventura mall, Florida. Image source: mariakraynova © 123RF.com
Bearish pressure on the EURUSD continues to rise markedly following the release of the latest retail sales numbers in the U.S. You can read more about the broader market sentiment currently from our latest comprehensive analysis of the pair.
Retail sales in the U.S. seesawed in July, contracting 1.1 per cent from the positively revised 0.7 per cent growth that was recorded a month prior. The slump exceeded the preliminary market forecasts, underpinning the ongoing change in global demand pressures.
Meanwhile, the greenback continues to strengthen in the short term as the EURUSD sinks lower.
EURUSD 1H Price Chart. Image source: Trendsharks ©, created with TradingView.com
As can be seen on the hourly chart above, the EURUSD pair is currently probing the major resistance-turned-support area with an upper boundary underpinned by the resistance level at 1.17500 and a lower boundary represented by the 61.8 per cent Fibonacci retracement level at 1.17425.
Additionally, the price action continues to depreciate within the boundaries of the descending channel. It is currently testing the lower limit of the channel as well.
The latest bearish reversal emerged after the price action was denied at the upper border of the channel. Even more importantly, the current downswing commenced following a reversal from the 50-day MA (in green).
If the price action manages to break down below the 61.8 per cent Fibonacci decisively, its next target would likely be the last swing low - the major support level at 1.17100. However, a potential pullback to the 38.2 per cent Fibonacci retracement level at 1.17666 is also plausible.
Bigger than expected contraction in retail sales for July
U.S. retail sales continue to bounce up and down on a monthly basis as demand for commodities continues to give way to heightened interest for services.
U.S. MoM Retail Sales. Image source: TradingEconomics.com
As stated earlier, the index contracted by 1.1 per cent in July compared to the 0.7 per cent expansion that was observed a month prior. The initial market forecasts were anticipating a much smaller dive of only 0.2 per cent.
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