US Monthly Retail Sales Overview

Friday's US economic docket highlights the release of monthly Retail Sales figures for September, due later during the early North American session at 12:30 GMT. On a monthly basis, the headline sales are estimated to register a modest 0.2% rise during the reported month. Excluding autos, core retail sales probably declined by 0.1% in September as compared to the 0.3% fall in the previous month.

According to Dhwani Mehta, Senior Analyst at FXStreet: “Amidst the continued drop in gasoline prices, easing inflation expectations and improvement in American consumers’ confidence, yet another rise in US Retail Sales may not come as a surprise for the month of September. The more precise gauge, the Control Group is expected to show an increase, which could have a significant impact on the US dollar trades.”

How Could it Affect EUR/USD?

Ahead of the key release, the US dollar attracts fresh buying on Friday and stalls the previous day's sharp retracement slide from the post-US CPI swing high. The markets are currently pricing in a greater chance of another supersized 75 bps Fed rate hike move in November, which, along with a turnaround in the risk sentiment, underpins the safe-haven buck. Any disappointment from the US macro data is likely to be overshadowed by expectations for a more aggressive policy tightening by the Fed. This, in turn, suggests the path of least resistance for the greenback is to the upside, supporting prospects for the resumption of the EUR/USD pair's descending trend.

Eren Sengezer, Editor at FXStreet, offers a brief technical outlook and writes: “EUR/USD failed to make a four-hour close above 0.9800 despite having climbed above that level earlier in the day. Meanwhile, the Relative Strength Index (RSI) indicator stays near 50, suggesting that the pair is struggling to gather bullish momentum..”

Eren also outlines important technical levels to trade the EUR/USD pair: “If the pair manages to flip 0.9800 into support, it could extend its rebound toward 0.9840 (Fibonacci 50% retracement of the latest downtrend), 0.9880 (200-period SMA, Fibonacci 61.8% retracement) and 0.9900 (psychological level)..”

“On the downside, 0.9750 (Fibonacci 23.6% retracement, 100-period SMA) aligns as key support. In case buyers fail to defend that level, additional losses toward 0.9730 (20-period SMA), 0.9680 (static level) and 0.9630 (October 13 low) could be witnessed,” Eren adds further.

Key Notes

 •  US Retail Sales Preview: Positive surprises eyed for dollar bulls to regain poise

 •  EUR/USD Forecast: Euro needs to clear 0.9800 to extend rebound

 •  EUR/USD: Sellers return to the market and retreat to 0.9750

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).