Strong US retail sales results surpass expectations, boosting GDP consumer spending outlook. Wall Street banks, including Goldman Sachs, adjust Q3 GDP forecasts based on robust US economic indicators. Fed’s Kashkari underscores persistent inflation concerns and the sturdy US economy, fueling speculation of rate hikes. EUR/USD extends losses for a second day, trading above 1.0900, as strong US data reignites Fed tightening fears. At present, the euro exchange rate stands at 1.0903, showing a 0.02% gain at the start of the Asian session.
EUR/USD Sways Amid Solid US Data and Revised Wall Street GDP Predictions
The EUR/USD experienced fluctuations after the US Commerce Department revealed that US Retail Sales surpassed projections, growing by 0.7% in July, while core retail sales, excluding Autos, jumped 1%. Core Retail Sales strongly correlate with GDP consumer spending.
While the initial data caused buy euros to decline, option expirations triggered a rally. Post the cut, the pair reversed its course, closing near the session’s lows.
The US Labor Department’s Import and Export Prices exceeded estimates, while the New York Federal Reserve reported a plunge in the Manufacturing Index.
Fed President Neil Kashkari highlighted ongoing inflation worries, emphasizing the economy’s resilience.
EUR/USD Technical Outlook: Neutral to Downward Bias
Goldman Sachs revised Q3 GDP forecasts to 2.2% after strong US economic indicators. The Atlanta Fed GDPNow model, estimating GDP, updated its projection to 5% from 4.1% previously predicted on August 8.
Despite the data, expectations of a September Fed rate hike pause remained at 89%, with November standing above a 30% chance.
The euro exchange rate maintains a neutral to downward bias with lower highs and lows, indicating a downtrend. Tuesday saw the pair dipped below the 100-day EMA. A breach of the current week’s low of 1.0874 could lead to further declines. Support levels include 1.0833, 1.0800, and the 200-day EMA at 1.0784. To challenge daily EMAs, EUR/USD buyers must keep prices above 1.0900, targeting resistance levels at 1.0930, 1.0972, and 1.0994.