The single European currency tried to bounce back from the very morning yesterday and recover from the sharp decline that happened on Wednesday. And this was even favored by macroeconomic statistics, in the form of data on industrial production, the growth rate of which slowed down from 10.1% to 7.7%. It should be noted here that a slowdown was predicted to 6.2%.
Industrial production (Europe):
Nevertheless, it was not possible to carry out a full-fledged rebound, as in the United States the data on the industry also turned out to be noticeably better than forecasted. It was expected that the rate of its growth would slow down from 6.6% to 5.0%, but in fact, they decreased only to 5.9%. In other words, the US economic recovery is progressing somewhat better than anticipated.
Industrial Manufacturing (United States):
However, today the euro will have another opportunity not just to carry out a local correction, but even try to return to the values at which it was before the noticeable decline that happened on Wednesday. The US industry certainly shows good results, but from the point of view of the markets, this is a secondary indicator. Much more important is the state of consumer activity, which is the main engine of the American economy. The best indicator of its condition is retail sales, the growth rate of which should slow down from 15.8% to 13.0%. However, due to the continuing effect of a low base, the annual data are not entirely informative. So it is better to focus on the monthly period. But the fact is that retail sales may decrease by 0.7% in monthly terms. And do not forget that inflation in the United States has decreased. In other words, consumer prices are falling simultaneously with consumer activity. This is an extremely unpleasant combination.
Retail Sales (United States):
The price rebound from the resistance area of 1.1850 returned the quotes to the support level of 1.1800, where there was a 30-hour stagnation in the range of 1.1800/1.1830. The technical indicator RSI moves along the 50 line, this is an equilibrium signal. In this case, it confirms the formation of a flat on the market.
Taking into account the low market dynamics and the sideways course, we can assume that we are dealing with the process of accumulation of trading forces. This is highly likely to lead to a new round of acceleration.
Based on the daily period, traders are still focused on the downward trend from the beginning of June. All subsequent price fluctuations are in its structure.
Expectations and prospects:
The level of 1.1800 acts as a support, holding back bears from further weakening of the euro rate. An increase in the volume of short positions will occur when the price stays below 1.1790 in a four-hour period. This will lead to a phased decline towards 1.1770-1.1700. An alternative scenario will become relevant if the price stays above the value of 1.1850 in a four-hour period. In this case, the downward cycle will be disrupted, which may lead to a change in trading interests.
Comprehensive indicator analysis gives a sell signal based on short-term and intraday periods due to price movement along the level. In the mid-term, technical instruments point to a sell signal due to a downward cycle from the 1.1880/1.1905 resistance area.