EUR/USD comes under selling pressure as bears target parity
The EUR/USD price dropped to an important support level as investors waited for the upcoming FOMC minutes and US retail sales data. It fell to a low of 1.0200, which was the lowest level since August 10 of this year. It has dropped by more than 1.6% from its highest point this month.
FOMC minutesCopy link to section
The EUR to USD exchange rate will be in the spotlight this week as the US is scheduled to publish important retail sales data. Economists polled by Reuters expect the numbers to reveal that the country’s sales dropped from 1.0% to 0.1% in July. Core retail sales are expected to have dropped from 1.0% to -0.1% in July.
These retail sales numbers will come on the same day that the biggest American retailers are scheduled to publish their quarterly results. This includes retailers like Target, Home Depot, and Lowe’s.
The EUR/USD pair will also react to the latest FOMC minutes. In July, the Federal Reserve decided to deliver the second straight 0.75% rate hike this year. In total, the bank has hiked interest rates by 225 basis points this year.
Therefore, the FOMC minutes will provide more colour about the deliberations that happened during the meeting. Many Fed speakers like Neel Kashkari and Mary Daly hinted that the bank will continue hiking interest rates until inflation shows signs of sustained declines.
The EUR/USD price will also be in focus because of other economic data from the US. For example, the country will publish the latest housing starts and building permits numbers on Tuesday. It will next deliver the latest existing home sales on Thursday.
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The other important numbers to watch will be the upcoming European GDP numbers and consumer inflation that are scheduled for Tuesday and Wednesday.
EUR/USD forecastCopy link to section
The four-hour chart shows that the EUR to USD exchange rate rose to the important resistance point at 1.0366 on Thursday. This was a notable level since it was the lowest level in June. It has moved below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) is near the oversold level.
The pair will likely continue falling as sellers target the next key support level at 1.0050. A move above the resistance at 1.0261 will invalidate the bearish sign.