Eur/usd rises as euro area retail trade improves but economic sentiment falters

EURUSD Analysis

Performance after Tuesday
Period	Pct	Chg	Momentum
Tuesday	0.46%	50.3 Pips
Week to-date	-0.08%	-8.8 Pips
April	1.45%	156.8 Pips

Upcoming key events (London Time)

Wed 07:00 PM USD FOMC Meeting Minutes
Thu 01:30 PM USD CPI Inflation Rate (12-mth)

What happened lately

The Euro Area Retail Trade Turnover showed a noticeable improvement in February, rising to 0.3% after a decline of -0.3% in January, according to Eurostat. Over the same 12-month period, retail turnover saw an increase to 2.3%, up from a revised 1.8% in January. This suggests a strengthening consumer spending environment in the region. However, this positive development was offset by a significant drop in the sentix Economic Index for the Eurozone in April, which plummeted to -19.5 points from -2.9 points in March, indicating a substantial deterioration in economic sentiment among investors.

In Germany, the trade balance showed robustness, rising to €17.7 billion in February after a seasonal adjustment, compared to €16 billion in January, as reported by Destatis. This improvement reflects a positive trade environment despite challenges in industrial production. On the downside, Germany’s industrial production figures were less optimistic. The unadjusted data showed a decline to -4% in February from -1.6% in January, while the seasonally adjusted numbers also decreased to -1.3%, following a 2% increase in January. This downturn in industrial production highlights potential pressures on Germany’s manufacturing sector.

The recent rise of EURUSD by 0.46% to 1.09757 could be influenced by these mixed economic signals from the Euro Area and Germany. While improved retail trade turnover offers support to the euro, the decreased economic sentiment and challenges in industrial production could hold back further gains. Additionally, the upcoming high-impact US economic events, such as the FOMC Meeting Minutes and CPI Inflation Rate data, are likely to add further volatility to EURUSD. Any hawkish signals from the FOMC or an unexpected rise in US inflation could strengthen the dollar, placing downward pressure on EURUSD.

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What can we expect from EURUSD today?

EURUSD on Tuesday rose 0.46% to 1.09757. Price is above 9-Day EMA while Stochastic is falling.

Updated daily direction for EURUSD looks bullish as the pair ended higher after Tuesday trading session.

Looking ahead for the day, immediate upside resistance level is R1 at 1.10853 with break above could target R2 at 1.11948 or figure level area. While towards the downside, we are looking at daily low of 1.08956 as an important support. Break below this level could weaken the current bullish momentum. A break above 1.11000 may suggest continuation after recent positive movement.

For the week to-date, take note that EURUSD is mixed as compared to the prior week.

Key levels to watch out:

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