Date: 15 Aug 2017

Analysts expect Tuesday’s US retail sales to bounce back after June’s 0.2 per cent fall and that Thursday’s US industrial production (IP) figure will also be on the strong side. The issue for US dollar bulls is whether such outcomes trump last week’s sub-expectations US inflation data. Dutch bank ING thinks not. ING feels decent US retail sales and IP prints would be “unlikely to be enough to significantly change the very benign market outlook of the Fed tightening cycle.” Consequently the Dutch firm thinks there is “limited upside to USD against G10 low yielders.” As regards specific levels in EURUSD that traders may wish to watch out for, US bank BNYMellon feels 1.1735 represents one possible support (based on a trend line up from mid-June on their chart). While on the topside the recent trend high of 1.1910 is more than likely to be on traders’ radar screens as either a possible resistance point or, perhaps, an acceleration point from which the euro can make another leg up. But traders will also have to bear in mind that sandwiched between Tuesday’s US Retail Sales and Thursday’s US Industrial Production data comes the release of the minutes from the FOMC’s July meeting. Those minutes might provide greater clarity about the timing of balance sheet reduction by the Fed, which would in effect be a form of monetary policy tightening.  Traders may have to be on their toes. It may be summertime but the living ain’t necessarily easy.

As regards specific levels in EURUSD that traders may wish to watch out for, US bank BNYMellon feels 1.1735 represents one possible support (based on a trend line up from mid-June on their chart). While on the topside the recent trend high of 1.1910 is more than likely to be on traders’ radar screens as either a possible resistance point or, perhaps, an acceleration point from which the euro can make another leg up. But traders will also have to bear in mind that sandwiched between Tuesday’s US Retail Sales and Thursday’s US Industrial Production data comes the release of the minutes from the FOMC’s July meeting. Those minutes might provide greater clarity about the timing of balance sheet reduction by the Fed, which would in effect be a form of monetary policy tightening.  Traders may have to be on their toes. It may be summertime but the living ain’t necessarily easy.

Written by Neal Kimberley, External Currency Analyst.