EURUSD Under Pressure Ahead of US Retail Sales

This Friday at 15:30 (GMT+2), the US Retail Sales data will take center stage, potentially impacting USD market dynamics. The EURUSD pair has fallen over 5.5% since late September, driven by technical indicators such as a bearish “non-failure swing” pattern, a “Death Cross” on moving averages, and consistent bearish signals from Momentum and RSI indicators. Key resistance levels to watch are 1.06192, 1.07603, 1.09358, and 1.10319, while support levels include 1.04950, 1.04474, 1.03648, and 1.01934. On the fundamental side, October’s PPI rose 0.2%, with services driving gains while energy prices capped growth. Market expectations for a Fed rate cut in December add further complexity, with upcoming data releases likely to shape inflation projections and guide traders navigating these dynamic conditions.

Friday 09:00 am (GMT+2) – UK: Retail Sales m/m (GBP)
Friday 15:30 (GMT+2) – USA: Retail Sales m/m (USD)

Following Donald Trump’s presidential election victory, the US dollar has strengthened notably, exerting pressure on major global currency pairs. The euro, in particular, has declined over 5.5% against the US dollar since its September 25 high of 1.12130. This decline has been driven by key technical indicators pointing to sustained bearish sentiment.
A pivotal factor in the euro’s downward trajectory is the formation of a bearish reversal pattern referred to as a “non-failure swing.” This pattern emerged when the peak at 1.12130 exceeded the previous high but subsequently fell below the prior trough, signaling the potential for further downside. Compounding this bearish outlook, a “Death Cross” occurred as the 20-period Exponential Moving Average (EMA) crossed below the 50-period EMA, increasing downward momentum. Additionally, prices began closing below the lower Bollinger Band, underscoring persistent selling pressure.
Currently, the EURUSD pair remains under both the 20- and 50-period EMAs, while key momentum indicators reinforce the bearish outlook. The Momentum oscillator is positioned below the 100 level, and the Relative Strength Index (RSI) remains below 50—both suggesting continued weakness. However, a positive divergence between the Momentum oscillator and price is emerging, which may indicate a potential reversal in the near term, warranting close monitoring for signs of a shift in market dynamics.

If buyers take control of the market, traders may shift their focus to the following four potential resistance levels:
1.06192: The first level of resistance is determined at 1.06192, which reflects the weekly support, S3, calculated using the standard Pivot Points methodology.
1.07603: The second resistance level is projected at 1.07603, which aligns with the swing low from October 23 and the 20-period Exponential Moving Average.
1.09358: The third price target is established at 1.09358, which corresponds to the swing high marked on November 5.
1.10319: An additional price objective is estimated at 1.10319, mirroring the weekly resistance, R2, calculated using the standard Pivot Points methodology.

If sellers maintain control of the market, traders may focus on the following four key support levels:
1.04950: The initial support level is seen at 1.04950, representing yesterday’s daily low.
1.04474: The second support level is positioned at 1.04474, aligning with a weekly support level.
1.03648: The third downside target is noted at 1.03648, corresponding to the weekly support, S3, calculated using the standard Pivot Points methodology.
1.01934: An additional downside target is determined at 1.01934, reflecting the 423.6% Fibonacci Extension drawn from the swing low, 1.07603, to the swing high, 1.09358.

The Producer Price Index (PPI) for October 2024 rose by 0.2%, driven primarily by a 0.3% increase in service prices, while goods prices saw a modest 0.1% rise. Year-over-year, the final demand index increased by 2.4%. The PPI for services was mainly supported by price gains in portfolio management and various transportation and warehousing sectors despite declines in apparel retail margins. In the goods sector, rising prices for items like carbon steel scrap were offset by decreases in energy goods, including liquefied petroleum gas. Expectations of Fed rate cuts in December are influencing market dynamics, and upcoming economic releases may further impact inflation projections.

In conclusion, the upcoming US Retail Sales data at 15:30 (GMT+2) is expected to potentially influence USD movements, while the EURUSD remains under bearish pressure due to both technical and fundamental factors. Key resistance and support levels highlight critical areas for potential price action, and traders should remain vigilant as market sentiment may shift with additional data releases and evolving expectations for Fed policy.