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Last week, any macro data, especially the upbeat statistics for the eurozone, triggered jitters in the market. However, with the opening of the new trading week, the market came to a standstill despite all the better-than-expected macro reports delivered in the eurozone and the United Kingdom. The euro made several unsuccessful attempts to edge higher but had to return to its initial position. The currency is unable to extend gains due to the extremely overbought US dollar. Meanwhile, the market is looking forward to entering a correction. Anyway, yesterday's attempt to go higher indicates that the euro may advance should particular circumstances come along. In fact, it may happen already today after the UK inflation report is delivered. Consumer prices in the country are projected to accelerate to 11.0% versus 10.1%, meaning the Bank of England would stick to aggressive tightening. The regulator is anticipated to raise interest rates by 75 basis points at the next meeting. This would be enough for the greenback to get weaker. In addition, retail sales growth in the United States may slow down to 6.9% versus 8.2%, reflecting a noticeable decline in consumer spending, the main driver of economic growth. In other words, although the American economy might not be sliding into a recession, its economic activity is definitely declining.
United States Retail Sales:
Moving up, EUR/USD approached resistance at 1.0500. As a result, buying volumes decreased, and an overheated euro entered a technical correction.
The RSI crossed line 70 from top to bottom when a pullback began on the H4 chart, signaling a fall in buying volumes. Notably, the indicator is still in the range between 50 and 70, and bullish sentiment is felt across the market.
The Alligator's MAs are moving up on the H4 and D1 charts, illustrating an uptrend.
Outlook
In terms of technical analysis, the uptrend will extend if the price breaks through resistance at 1.0500. The confirmation of this signal will come if the quote consolidates above this barrier on the H4 chart.
Meanwhile, a correction may occur, should the price settle below 1.0300 on the H4 chart.
Based on complex indicator analysis, a pullback from resistance signals a short-term downtrend. At the same time, a strong sideways movement indicates a continuation of an uptrend in the medium term and intraday.
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