The data on retail sales in the United States was somewhat surprising. Their growth rate accelerated to 27.7%, which can be considered as some kind of fantastic value. This has never happened before. In this context, the revision of the previous data from 6.3% to 6.7% does not matter at all. The growth is so huge that even references to the low-base effect look extremely strained. In March last year, the rate of decline was -5.6%. Then it was accompanied by the introduction of various restrictive measures due to the coronavirus pandemic, as well as the growth of panic in society. It is clear that after the removal of most of these restrictions, consumer activity should have shown growth, but not as huge. Moreover, in April last year, the rate of decline in retail sales was -19.9%. It turns out that the growth in retail sales will be even greater next month. In general, the data is not just surprising, they literally put the market in a stupor. Investors have no idea what to do with such figures, and how to interpret them. They go beyond formal logic and common sense. In addition, there are suspicions about the adequacy of US macroeconomic statistics.
Retail Sales (United States):
It is clear that the data on retail sales had such a strong psychological effect that they did not even look at everything else yesterday. Data on industrial production and applications for unemployment benefits were published. But in the context of the simply fantastic and somewhat inadequate growth in retail sales, they did not matter at all. And since investors have no idea what to do with all this now, they need to somehow get out of this situation. Apparently, the data on inflation in Europe will help them in this. The growth rate of consumer prices should accelerate from 0.9% to 1.3%. Growth is relatively moderate, which somewhat reduces concerns about the unwinding of the inflationary spiral. Moreover, unlike the Federal Reserve, the European Central Bank at least does not turn a blind eye to the problem. The management of the European regulator constantly talks about the existing risks, although it connects them exclusively with the coronavirus pandemic, thereby indicating that the problem is only of a short-term nature. However, it is important that the problem is not hushed up and the regulator makes it clear that it is possible to take some measures. So, the potential actions of the European Central Bank will not be unexpected, in contrast to the steps that the Federal Reserve can take. This distinguishes the single European currency from the dollar. So, a relatively moderate increase in inflation will be more likely to be perceived as a positive factor contributing to the strengthening of the single European currency.
The EUR/USD currency pair continues to remain calm within the border of the psychological level of 1.2000, despite the fact that the overbought status of the euro has already been confirmed in the market.
The market dynamics shows signs of slowing down relative to 48 hours, which coincides with the control approach to the level of 1.2000.
If we proceed from the current location of the quote, we can see the movement in prices within the lower part of the psychological level of 1.1950/1.2000.
Looking at the trading chart in general terms, the daily period, it is clear that the area of the level of 1.2000 serves as a kind of barrier for buyers, which they are trying to break through.
In this situation, we can assume that the quote will continue to follow the amplitude of 1.1950/1.2000, where due to the process of slowing down in the period of 48 hours, speculative activity is not excluded at the end of the accumulation process.
From the point of view of complex indicator analysis, it can be seen that the indicators of technical instruments unanimously signal a purchase due to the price movement at the peak of the upward turn 1,1703 ---- > 1,1993.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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