US Monthly Retail Sales Overview
Tuesday's US economic docket highlights the release of monthly Retail Sales figures for April, scheduled later during the early North American session at 12:30 GMT. The headline sales are estimated to have risen by a seasonally adjusted 0.7% during the reported month as against the 0.5% growth recorded in March. Excluding autos, core retail sales probably climbed by 0.3% in April, down sharply from the 1.1% increase reported in the previous month.
Analysts at Commerzbank offered a brief preview of the report and explained: “Retail sales are likely to have risen by 0.8% in April from March even as the decline in the price of gasoline depressed sales by half a percentage point. In contrast, we expect a strong increase in new car purchases based on data from auto manufacturers. Overall, such an increase in retail sales would be encouraging, as the days when consumers mainly bought goods and consumed fewer services (of which only restaurant sales are included in retail sales) because of the pandemic are now over. Instead, the consumption profile is slowly returning to normal, for example, because consumers are traveling more frequently again.”
How Could it Affect EUR/USD?
Ahead of the key release, the risk-on impulse dragged the safe-haven US dollar further away from a two-decade high and pushed the EUR/USD pair back above the 1.0500 psychological mark on Tuesday. A weak sales number would fuel concerns about softening US economic growth and exert additional downward pressure.
Conversely, stronger readings might do little to impress the USD bulls as the markets already seem to have fully priced in at least a 50 bps Fed rate hike move over the next two meetings. This, in turn, suggests that the path of least resistance for the EUR/USD pair is to the upside, though the immediate market reaction is likely to be short-lived ahead of Fed Chair Jerome Powell's appearance.
According to Eren Sengezer, Editor at FXStreet: “The Relative Strength Index (RSI) indicator on the four-hour chart stays below 70 while holding above 50, suggesting that the pair has more room on the upside before turning technically overbought.”
Eren also outlined important technical levels to trade the EUR/USD pair: “On the upside, 1.0480 (50-period SMA, Fibonacci 50% retracement of the latest decline) aligns as initial resistance. In case this level turns into support, 1.0500 (psychological level, Fibonacci 61.8% retracement) and 1.0530 (100-period SMA) could be seen as the next recovery targets.”
“Supports are located at 1.0450 (Fibonacci 38.2% retracement), 1.0420 (Fibonacci 23.6% retracement) and 1.0400 (psychological level),” Eren added further.
Key Notes
• US Retail Sales April Preview: Market risk centers on recession
• US Retail Sales Preview: Forecasts from eight major banks, a decent gain
• EUR/USD Forecast: Door opens for additional recovery gains
About US Retail Sales
The Retail Sales released by the US Census Bureau measures the total receipts of retail stores. Monthly per cent changes reflect the rate of changes in such sales. Changes in Retail Sales are widely followed as an indicator of consumer spending. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or bearish).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD dips below 0.6600 following RBA’s decision
The Australian Dollar registered losses of around 0.42% against the US Dollar on Tuesday, following the RBA's monetary policy decision to keep rates unchanged. However, it was perceived as a dovish decision. As Wednesday's Asian session began, the AUD/USD trades near 0.6591.
EUR/USD lacks momentum, churns near 1.0750
EUR/USD cycled familiar levels again on Tuesday, testing the waters near 1.0750 as broader markets look for signals to push in either direction. Risk appetite was crimped on Tuesday after Fedspeak from key US Federal Reserve officials threw caution on hopes for approaching rate cuts from the Fed.
Gold wanes as US Dollar soars, unfazed by lower US yields
Gold price slipped during the North American session, dropping around 0.4% amid a strong US Dollar and falling US Treasury bond yields. A scarce economic docket in the United States would keep investors focused on Federal Reserve officials during the week after last Friday’s US employment report.
Democrats to introduce bill targeting crypto mixing services
Rep. Sean Casten revealed in a House hearing on Tuesday that Democrats are planning to issue a bill this week that would target crypto-mixing protocols. Democrats and Republicans also clashed over the SEC's recent action against crypto companies.
Living vicariously through rate cut expectations
U.S. stock indexes made gains on Tuesday as concerns about an overheating U.S. economy ease, particularly with incoming economic reports showing data surprises at their most negative levels since February of last year.