EUR/USD Looking Tempting to Sell As It Retraces to 1.05

EUR/USD has been falling since the middle of July, with buyers remaining in control, while moving averages are providing resistance during retraces higher. This pair has been weighed down by a strong US Dollar (USD), which has been buoyed by favorable US economic data and a rise in US bond rates and the price went below 1.0450 but it retraced above 1.05 again as US treasury yields retreated.

Following the fresh 8-month low well below 1.0500, this rebound is a welcome comfort for Euro buyers. It remains to be seen, however, if this is a sustainable move. W decided to open a sell foex signal at the 20 SMA on the H4 hart though, since buyers are having difficulties pushign the price much higher above this level.

Eurozone September CPI by Eurostat – 29 September 2023

• September preliminary CPI YoY +4.3% vs +4.5% expected
• August CPI YoY was +5.2%
• Core CPI +4.5% vs +4.8% y/y expected
• Prior core CPI YoY was +5.3%

Euro area headline annual inflation fell to its lowest since October 2021, largely due to the steep fall in German price pressures as reported here yesterday. I would argue that it is still premature to declare victory on the inflation battle but the ECB will be able to use this latest data to spin the narrative in their favour after choosing to pause.

Eurozone Retail Sales Released by Eurostat – 4 October 2023

• August retail sales MoM -1.2% vs -0.3% expected
• July retail sales were -0.2%; revised to -0.1%

This further reaffirms that consumption activity in the euro area is looking rather abysmal in Q3. The details:

Remarks by ECB policymaker, Mario Centeno

• Inflation is falling faster than when it was rising
• We can expect that the interest rate cycle has been completed by now and with present conditions

They can say anything to manipulate the story in their favor now that they’ve opted to sit on the sidelines. They want to seem sure that they have done enough to return inflation to 2% in the next two years, but time will tell if they are correct – at least once.

EUR/USD Live Chart

EUR/USD