Euro-zone retail sales are expected to have increased by 0.2% in January as declining energy costs increases consumers purchasing power. However, the year-over-year reading is expected to show a 2.3% decline, which would be the eight straight negative month.
[B]Fundamental Outlook[/B]
Euro-zone retail sales are expected to have increased by 0.2% in January as declining energy costs increases consumers purchasing power. However, the year-over-year reading is expected to show a 2.3% decline, which would be the eight straight negative month. Last month saw German consumption drop 0.3% and considering the country saw unemployment rise to 7.9% from 7.8%, we could see further weakness. A drop in the regions largest economy’s demand could drag the overall indicator lower. A negative monthly reading in tandem with the expected annualized print could spark a bearish Euro reaction. However, a better than expected monthly gain would validate the bullish Euro technical outlook which is calling for a test of 1.33.
[B]Technical Outlook [/B]
Quite simply, the series of higher highs and higher lows since early March is bullish. I have written recently that “know that once the turn occurs, it will be fast…there are 2 areas to look for longs; the low side of the diagonal line and a break of the top side.” Another line, drawn off of the February 9th and 23rd highs, has provided resistance to additional gains so far. I do expect resistance to give way and for the EURUSD to make its way to 1.33. This outlook is intact as long as price is above 1.2610.
For More Technical Analysis Visit the Daily Technical Report
[I]To discuss this report contact John Rivera, Currency Analyst: [email protected][/I]