EUR/USD Forecast: Bearish case firm in place ahead of US Retail Sales

Valeria Bednarik FXStreet

EUR/USD Current Price: 1.2078

US weekly unemployment claims dropped to 473K in the week ended May 7.
The focus shifts to US Retail Sales to be out this Friday.
EUR/USD is technically bearish and could challenge the 1.2000 level.

The EUR/USD pair finished Thursday with modest losses around the 1.2080 level, as the greenback retained its strength despite an improved market’s mood. The American dollar advanced during the first half of the day, as global equities remained on the losing side while government bond yields advanced on the back of mounting concerns about rising US inflation. However, encouraging US data provided modest support to Wall Street, which in turn put a halt to the dollar’s rally.

The US published the April Producer Price Index, which surged by more than anticipated, printing at 6.2% YoY. More relevant, Initial Jobless Claims for the week ended May 7 came in at 473K vs the 490K expected, and the lowest reading since March 2020. On Friday, the country will publish April Retail Sales, expected to have declined by 0.2%, and the preliminary estimate of the May Michigan Consumer Sentiment Index, foreseen at 90.3 from 88.3 previously. The ECB will release the minutes of its latest meeting.

EUR/USD short-term technical outlook

The EUR/USD pair seesawed between gains and losses, meeting sellers around the 1.2100 threshold. The 4-hour chart offers a neutral-to-bearish stance, as the pair spent the day hovering around a directionless 100 SMA, while the 20 SMA gains bearish strength above the current price. Technical indicators have resumed their declines within negative levels, currently approaching oversold readings without signs of giving up.

Support levels: 1.2050 1.2000 1.1960

Resistance levels: 1.2110 1.2150 1.2190

View Live Chart for the EUR/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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