Market Overview

U.S. Core Retail Sales recently outpaced expectations, posting a rise of 1.1% against a forecast of 0.5%. This uptick, alongside a 0.7% increase in overall Retail Sales, suggests strong consumer activity, which may discourage the Federal Reserve from early interest rate cuts.

In Europe, the German Wholesale Price Index (WPI) saw a modest rise to 0.2%, hinting at mild inflationary pressures.

Events Ahead

Upcoming economic reports include the Italian Trade Balance, expected to show a balance of €3.44 billion, and the European Trade Balance projected at €27.3 billion. Additionally, the German ZEW Economic Sentiment is anticipated to improve to 35.9, providing insights into economic sentiment.

In the UK, labor market data released today showed a Claimant Count Change of 10.9K, with the Average Earnings Index holding steady at 5.6% and the Unemployment Rate at 4.2%. The Bank of England Governor’s upcoming speech is eagerly awaited for further indications of monetary policy directions.

For both currency pairs, the following U.S. data will be pivotal:

  • USD Building Permits and Housing Starts: Forecasted at 1.51M and 1.48M respectively, these figures will provide a snapshot of the U.S. housing market’s health.
  • USD Industrial Production: Expected to increase by 0.4%, with Capacity Utilization Rate projected at 78.5%.
  • Fed Chair Powell’s Speech: His insights will be vital for understanding the Fed’s view on economic conditions and interest rate decisions.

US Dollar Index (DXY)

Dollar Index
Dollar Index

The Dollar Index today demonstrated modest gains, climbing 0.14% to a level of 106.409. It is currently trading above its pivotal mark at $105.823, which suggests a potential continuation of the upward momentum. Immediate resistance is anticipated at $106.654, with further ceilings at $107.365 and $108.087.

On the flip side, should the index retreat, it might encounter substantial support at $105.136, with additional lower barriers at $103.967 and $103.184. The 50-day and 200-day Exponential Moving Averages, positioned at $105.230 and $104.367 respectively, underpin the bullish sentiment.

Holding above $105.823 could sustain the uptrend, while a descent below this level might signal a shift towards a selling trend.

EUR/USD Technical Forecast

EUR/USD Price Chart - Source: Tradingview
EUR/USD Price Chart – Source: Tradingview

The EUR/USD pair edged down by 0.12%, trading at 1.06090, slightly below its pivotal level at $1.06609. Should the currency pair rise above this pivot, it might encounter resistance at $1.07249, followed by higher thresholds at $1.07946 and $1.08731.

Conversely, support lies at $1.05640, with further safeguards at $1.05160 and $1.04616, which could stabilize declines.

Technical indicators suggest a bearish sentiment as the price is currently below both the 50-day Exponential Moving Average at $1.07321 and the 200-day at $1.08055. A sustained movement above the pivot point may alter the bearish outlook to a more bullish stance.

GBP/USD Technical Forecast

GBP/USD Price Chart - Source: Tradingview
GBP/USD Price Chart – Source: Tradingview

Today, the GBP/USD pair has declined by 0.20%, with the current price at 1.24193, positioning itself below the critical pivot point at $1.24965. If the pair climbs above this level, it could face resistance at $1.25786, with further barriers at $1.27051 and $1.28006.

On the downside, the first line of support is located at $1.23731, with additional support levels at $1.22853 and $1.21924. The 50-day and 200-day Exponential Moving Averages are at $1.25466 and $1.26269 respectively, suggesting underlying bearish pressures. A move above $1.24965 might shift the sentiment to a more bullish outlook.

For a look at all of today’s economic events, check out our economic calendar.