U.S. Dollar May Drop After New Macroeconomic Data

Q2 GDP in the eurozone is unlikely to somehow affect the market although the economy is projected to expand by 13.7% after falling by -1.3%. This is already the second estimate, which should only confirm the previous results. The reading has already been priced by the market. Thus, market participants have nothing to expect, which means that there are no grounds for unnecessary fuss.

Euro Area GDP:

Meanwhile, macroeconomic statistics in the US may well lead to a decline in the US dollar. It is all about a possible drop in retail sales to 11.5% from 18.0%. The annual results remain skewed due to the low base effect. Therefore, monthly figures will be of greater importance. Retail sales are estimated to fall by -0.3% from a month earlier. In other words, the US economy is recovering slower than expected. Industrial production data may help offset the negative impact on the market a bit although the reading is projected to plunge to 7.2% from 9.8% y/y. It is all about the low base effect as industrial production should rise by 0.3% m/m. Anyway, retail sales have greater weight. So, they will determine market sentiment. Industrial production will only make small adjustments.

United States Retail Sales:

The EUR/USD pair went down to the resistance level of 1.1800 that crosses the 50.0% Fibonacci retracement, causing a decrease in the volume of long positions. The relative strength index (RSI) confirmed a sell signal at the moment of crossing the 70% retracement level from top to bottom.The RSI indicator is currently located below the 50.0% Fibonacci retracement, which indicates a strong bearish sentiment.

Outlook

Market participants expect the price to recover. The volume of short positions is likely to increase in case the quote consolidates below the 23.6% Fibonacci retracement level of 1.1750. Then, the price might go down to 1.1700.An alternative scenario will be considered if the price returns above the 38.2% Fibonacci retracement level. In terms of complex indicator analysis, technical indicators are sending a sell signal on short-term and medium-term time frames.

InstaForex Group

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