Investors are still cautious about risks caused by inflation acceleration in the United States. This is the key reason for the euro's continuous rise. That is why a pullback and correction are needed. Most likely, today's retail data will calm investors down. Indeed, inflation grows, and as a consequence consumer activity drops. This leads to a decrease in corporate profits. Anyway, US retail sales are expected to increase to 7.9% from 6.3%. Simply put, consumer prices rise along with consumer activity. This also means that corporate profits grow rapidly. At least for a while, all this will make everyone forget about risks of the inflationary spiral unwinding and the Fed's possible unexpected measures aimed to control the situation.
US Retail Sales:
At the same time, the retail sales report is not the only event today. The US will also publish its jobless claims data. In fact, the forecast looks promising. Thus, initial jobless claims should contract to 751K from 744K. Meanwhile, continuing claims are expected to decline to 3,600K from 3,734K. All in all, the US labor market is gradually recovering, which is, of course, a positive factor.
US Initial Jobless Claims:
The EUR/USD pair has been in the bullish trend since Monday. As a result, the euro gained 100 pips and reach the psychological level of 1.2000 (1.1950/1.2000/1.2050).
Given the speculative behaviour of market participants, there are all signs of acceleration in the market.
Based on its current location, the price moves within the boundaries of the psychological level.
On the daily chart, the price dropped by 45% to 1.1703 from 1.2349 at the moment.
In this case, it can be assumed that the overbought condition triggered by the corrective move has led to a significant increase in long positions. Along with the psychological level of 1,2000, this may lead to a slowdown of the upward trend and a pullback.
As for comprehensive indicator analysis, the technical indicators give a buy signal owing to the upward trend. In case the trend slows down, the minute and hourly time frames will send the first signal.
*The market analysis posted here is meant to increase your awareness, but not to give instructions to make a trade.
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