- A state of instability has dominated the markets since the start of trading this week, but in general safe havens still prevail, led by the US dollar, which explains the continued control of the bears in the direction of the currency pair EUR/USD, and the support 1.0500 still symbolizes the extent of the bears’ control over the trend.
- Nearby, EUR/USD attempts to rebound to the highest resistance level did not exceed 1.0594 before settling around the 1.0570 level at the time of writing this analysis, awaiting anything new.
- Severe and successive tensions in the Middle East region continue to dominate investor sentiment and the performance of financial markets.
On the economic side, Americans showed their unwavering resilience and continued to spend online, at restaurants and other outlets in September, even as they grappled with rising prices, rising interest rates, and a host of other accumulating headwinds. In this regard, the Commerce Department reported that US retail sales rose by 0.7% in September, more than double what economists expected, and close to the revised rise of 0.8% in August. However, retail sales increased in August after gasoline prices rose on the contrary in September when gas prices rose more slowly.
Remarkably, the closely watched categories of retail sales, which excludes auto dealers, gas stations and building materials and which feeds into gross domestic product, jumped by 0.6% last month from the previous month. However, sales figures have not been adjusted for inflation, but the cost of goods barely rose last month, so the increased spending is not a reflection of higher prices. Also, the prices for durable goods, such as those sold by hardware and electronics stores, fell last month.
Overall, the US retail sales report, which reflects the sixth consecutive monthly gain, reinforces the fact that US consumers generally show no signs of slowing down on their spending, which supports most of the economy. This spending comes despite the Federal Reserve's attempts to calm spending and hiring. That's good news as the critical holiday shopping season approaches. But the strong sales report also means that Fed officials may leave the door open for further US interest rate hikes. This means shoppers may face higher interest rates for a while.
EUR/USD Technical Analysis
Despite yesterday's rebound, the broader general trend of the EUR/USD currency pair is still bearish, and as I mentioned before, the support at 1.0500 will remain a confirmation of the extent of the bears' control over the trend and the willingness to test stronger support levels. Especially, if geopolitical tensions increase in the Middle East region and the probability of the war expands. The statements of US Federal Reserve officials were supportive of more US interest rate hikes.
Therefore, we still expect attempts to rebound higher for the EUR/USD to be limited. however, the results of positive US economic data, statements by Federal Reserve officials, and the demand for safe havens will ultimately support the dollar. Nearby, the closest resistance levels for the EUR/USD are currently 1.0630 and 1.0700, respectively. Finally, EUR/USD will be affected today by the announcement of inflation readings in the euro zone and the statements of US Central Bank officials.
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