EUR/USD signal ahead of the September US retail sales data

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The EUR/USD price made a steady recovery as traders reflected on the strong US initial jobless claims numbers as they waited for the latest retail sales data. The pair rose to 1.1610, which was about 0.75% above the lowest level this month.

US retail sales ahead 

The US published strong economic numbers this week. On Wednesday, the Bureau of Labor Statistics (BLS) released strong inflation data. The numbers revealed that the US headline consumer inflation rose to 5.4% in September after rising by 5.3% in the previous month. This increase was driven by the rising energy prices and the ongoing supply shortages. 


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On Thursday, data by the BLS showed that the number of Americans filing for initial jobless claims declined sharply last week. Initial claims declined to 293k from 329k in the previous week. Continuing claims declined from 2.7 million to 2.5 million, the lowest level since the pandemic started.

The next key catalyst for the EUR/USD will be the latest American retail sales numbers scheduled for Friday. The numbers are expected to show that retail sales declined last month as consumers avoided higher prices. Also, wages have not moved at par with the rising cost of items. 

Economists polled by Reuters expect the data to show that retail sales declined by 0.7% in September after rising by 0.7% in the previous month. They also expect that the core retail sales fell from 1.8% to 0.5%. At the same time, the retail control is expected to have dropped from 2.5% to 0.4%. 

Retail sales are an important measure of the health of the economy. This is because, in the US, the retail sector is the biggest employer while consumption is the biggest part of the economy.

EUR/USD forecast

EUR/USD

The four-hour chart shows that the EUR/USD pair formed a double-bottom pattern at 1.1527. A double-bottom is usually a bullish sign. 

Since then, the pair has moved above the 25-day and 50-day moving averages. The two averages are even close to having a bullish crossover. The MACD and the Relative Strength Index (RSI) have also kept rising.

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