EUR/USD consolidating between 1.04529 and 1.04996 for three days. It hit a low of 1.04787 and currently trading around 1.05069.
In November 2024, U.S. core retail sales went up by 0.2%, which is lower than the expected 0.4% increase. However, total retail sales rose by 0.7%, exceeding expectations of 0.5%. The previous month's core retail sales were revised up from 0.1% to 0.2%, showing a slight improvement. The mixed results suggest that while overall retail sales are strong, core spending is weaker, indicating cautious consumer behavior. This data provides a complex view of consumer spending that could affect future economic forecasts and policy decisions.
The difference in monetary policy between the U.S. Federal Reserve (Fed) and the European Central Bank (ECB) is becoming clearer as economic conditions change. The Fed is expected to keep interest rates steady without cuts shortly due to strong job reports and ongoing inflation. In contrast, the ECB plans to start cutting rates as early as June 2024 because of lower inflation and stagnant growth in the euro area. While Europe faces slow growth, the U.S. economy shows stronger consumer spending. These differences could weaken the euro against the dollar, benefiting eurozone exporters but increasing inflation in Europe. Overall, the Fed is focused on fighting inflation, while the ECB is looking to support its struggling economy.
The pair remained below both short-term (34 and 55-4H EMA) and long-term (200-4H MA) moving averages. Near-term resistance is at 1.0550, and a breakout above this could push the pair towards targets at 1.0600, 1.0660, 1.070, 1.0760, and possibly 1.0900. Major bullish momentum is expected only if prices surpass 1.1000, which would open the door to 1.1070 and 1.1150. On the downside, immediate support is at 1.0460; a drop below this could lead to further declines to 1.0435, 1.0400, 1.0370, 1.0330, and 1.0240.
The Commodity Channel Index (CCI) indicates a bearish trend, while the Average Directional Movement Index (ADX) suggests a neutral outlook. Given the weak sentiment in technical indicators, a sensible strategy would be to sell on rallies around the 1.0550 mark, with a stop-loss at 1.0600 and a target price of 1.0435 for potential gains.
