Forex News: Friday was a slow day for the pair and the US Dollar struggled to drive the pair down but didn’t succeed although better than anticipated economic data was released by the United States.
On a four hour chart we can notice the fact that the Relative Strength Index started to move down, out of the overbought territory where it stayed for most of last week. This is indicative of a potential retracement lower, which will most likely touch 1.3830 support. Of course, price can continue to move north today as well, because indicators can signal an overbought condition for extended periods of time; if this is the case resistance will be provided by the level of 1.3965.
Euro Zone’s Industrial Production is released today at 9:00 am, with an estimated increase from the previous -0.2% to 0.3%. Higher than anticipated numbers usually strengthen the Euro but the indicator doesn’t have a high impact on the market. The main event of the day is the release of the US Retail Sales scheduled at 12:30 pm GMT. Retail sales are crucial for the overall state of the economy and higher values are considered bullish for the greenback; today’s forecast is an increase from the previous 0.3% to 0.8%.
The pair retraced lower Friday and this move was generated by the positive US data we mentioned earlier; however, this doesn’t change the fact that bulls are in control of the pair’s direction.
As we mentioned in our Weekly analysis, the pair printed a double top at 1.6820, which is a bearish chart pattern. We anticipate another move up, into this resistance zone and we believe that if price indeed moves there, it will offer hints about future direction: a bounce would indicate that bears are stepping in and a stronger retracement lower is in order, while a break will most likely bring more buyers in the market. Today’s important levels are 1.6750 and 1.6680 as potential support.
Price action will be mostly influenced by the US Retail Sales and by technical factors as the United Kingdom doesn’t release any high-impact economic data.