Dollar at New Record Low Against Euro After Disappointing Retail Sales
Dollar’s recent decline resumes in early US session after retail sales came in much worse than expected. Headline retail sales unexpectedly fell -0.9% in Jun, lowest in 2 years, dragged down by sharp declines in auto sales, furniture and building supplies. Ex-auto sales also dropped -0.4%, lowest growth in almost a year. Markets expected mildly growth of 0.1% and 0.2% respectively. Dollar is sent to record low against Euro and fresh 26 years low against Sterling immediately after the news. However, stronger than expected growth in import prices at 1.0% versus consensus of 0.7% is providing some support to the greenback.
EUR/USD
Daily Pivots: (S1) 1.3753; (P) 1.3776; (R1) 1.3811; More
EUR/USD surges to another new record high of 1.3812 in early US session. But still, upside is limited by key medium term resistance at 1.3822. Upside momentum remains unconvincing with mild bearish divergence condition in 4 hours MACD and RSI. But after all, there is no confirmation of a top yet. Further rally is still in favor as long as 1.3729 support holds. On the downside, below 1.3701 will suggest that a short term top could be in place already. Deeper decline should then be seen towards 4 hours 55 EMA (now at 1.3664 first).
In the bigger picture, the strength of the current rally from 1.3262, which is relatively stronger than prior rally from 1.2865 to 1.3681, is putting doubt on prior mentioned case that rise from 1.3262 is the last rally in a five wave structure that started at 1.2483. Also, daily MACD has broken its falling trendline, negated the bearish divergence condition which suggested loss of upside momentum. Nevertheless, Euro is now in an important resistance zone between 1.3766 and 1.3822 and focus will still be on reversal signal. but a break below 1.3567 support is needed to indicate the rise from 1.3262 has completed first before considering the chance of a medium term top being in place.
Also, as discussed before, whether medium term rally rally from 1.1639 represents resumption of multi-year up trend from 0.8233 remains in question. But a sustained break of 1.3822 fibo resistance will add much weight to this case and path the way towards 95 high of 1.4523 in medium term.
Read full report (EUR/USD, GBP/USD, USD/CHF, USD/JPY, EUR/JPY) here.
Shing-Ip Tsui is the founder and CEO of www.ActionForex.com. ActionForex is set up with the aim to empower individual forex traders by providing insightful contents. Analysis reports, live pivot points on majors and crosses, etc are provided with collection of carefully selected educational articles and free trading ebook downloads.