- The EUR/USD rally continued today as the risk-on sentiment prevailed.
- In the United States, data showed that sales rose by 0.3% in October.
- The export price index also rose by 0.2% while import price fell by 0.1%
The US dollar weakened against the euro as the risk-on sentiment in the market remained. It also reacted to disappointing retail sales numbers from the United States. The EUR/USD pair is trading at 1.1870, which is 2.30% higher than this month’s low of 1.1600.
US retail sales disappoint
The retail sector disappointed at the start of the fourth quarter as congress and White House remained at odds about providing another stimulus package. According to the Census Bureau, the overall sales rose by just 0.3% to $553 billion in October after rising to $551 billion in September. Economists polled by Reuters were expecting the sales to come in at 0.5%.
Are you looking for fast-news, hot-tips and market analysis?
Sign-up for the Invezz newsletter, today.
Core retail sales rose by 0.2% from September, which was also lower than the estimated increase of 0.6%. According to the bureau, retail trade sales rose by 0.3% while nonstore retailers rose by 29.1%.
Further data showed that the export price index increased by 0.2% on a MoM basis. It fell by 1.6% on an annualised basis. In the same month, the import price index fell by 0.1% and 1.0% on a MoM and YoY basis, respectively.
US battling Covid pandemic
The US retail sales numbers came at a time when the country is battling the Covid pandemic. Yesterday, the country confirmed more than 167k new cases and experts believe that the real situation is worse. That figure brought the total number of Americans who have been infected to more than 11.3 million, which is about 20% of the world’s total. Almost 1,000 people died of the disease on Sunday.
In response to the rising cases, several states in the country have started to implement new lockdown measures. In a statement yesterday, California governor, Gavin Newsom, said that most of the state will be in a lockdown. Most businesses, including bars, shops, and hotels will stay out of business.
With the cases rising across the country, other states have also added restrictive measures. For example, in New Jersey, many ‘nonessential’ businesses will stay closed. The same is true for states like Michigan, Oregon, and New Mexico. Therefore, as it happened in the first lockdowns, the current restrictions could spur some retail sales, including for essential items like toiletries.
Fortunately, which explains the current performance of EUR/USD is that Moderna and Pfizer have made strong progress on vaccine. Last week, Pfizer said that its vaccine was 90% effective while Moderna put its figure at 94.5%.
EUR/USD technical outlook
On the two-hour chart, we see that the EUR/USD has been on a strong rally this month. It is trading at 1.1880, which is an important resistance level since it was the highest level in October. The price has also remained above the 50-day and 25-day exponential moving averages (EMA).
This is a sign that bulls are prevailing, as you will find in our free forex trading course. Similarly, the price is above the ascending red trendline. Therefore, the pair will possibly continue rallying, with the next level to watch being 1.1900.
Source link