Euro spikes after strong Eurozone retail sales data

The US dollar slumped against major peers as investors wound-down their Friday’s risk-aversion trades. The dollar index declined by more than 0.20% as the dollar weakened by 0.35% against the euro, 0.50% against the Swiss franc, 0.35% against the Swedish krona, and by 0.25% against the Canadian dollar. The weakness came as investors reacted to news that Donald Trump’s condition was improving. According to his doctor, the president could be released today since his vitals have started improving. Later today, the currency will react to more information about his health. It will also react to the important ISM non-manufacturing PMI data.

The euro rose against key currency peers as investors reacted to the better-than-expected economic data from Europe. According to Markit, services PMI in the Eurozone declined to 48.0 in September from 50.5 in August. Analysts polled by Reuters were expecting the data to show that PMI declined to 47.6. In total, the composite PMI declined to 50.4, which is a signal that the Eurozone’s economy is making some progress. In Germany and France, the services PMI declined to 50.6 and 47.5, respectively. Meanwhile, according to Eurostat, retail sales rose by 4.4% month-on-month in August. That pushed the year-on-year growth to 3.7%.

The British pound rose slightly against the dollar as the market reacted to the mixed data from the UK. Data by the European Automobile Manufacturers’ Association (ACEA) showed that auto registrations declined by 276% month-on-month in September. That was the worst monthly decline this century. Meanwhile, according to Markit, the services PMI declined to 58.8 in September from the previous 58.8. The composite PMI fell to 56.5. With the manufacturing, services, and composite PMIs being above 50, it is a sign that the UK economy is relatively strong.

GBP/USD

The hourly chart shows that the GBP/USD pair was a bit volatile today. The price is trading at 1.2945, which is slightly below the intraday high of 1.2965. The price is also above the green ascending trendline. It is also above the 25-day moving average and along the middle line of the Donchian channels. Therefore, the upward trend is likely to remain as long as the price is above the ascending green line. If it does, the next level to watch will be the resistance at 1.3000.

EUR/USD

The EUR/USD pair rose to an intraday high of 1.1765 as traders reacted to strong data from Europe and the weaker dollar. The four-hour chart shows that the pair is trading at the neckline of the inverse head and shoulder pattern. It has also moved above the 25-day EMA while the signal and main line of the MACD indicator are above the neutral level. Therefore, since the inverse H&S pattern is usually bearish, the price is likely to continue rising as bulls aim for the next resistance level at 1.1800.

XBR/USD

The XBR/USD pair is up sharply today as traders reacted to a workers’ strike in Norway. The pair is trading at 40.90, which is higher than Friday’s low of 38.88. On the hourly chart, the price is slightly above the 25-day and 15-day exponential moving averages while the RSI has moved closer to the overbought level. The average directional movement index has also continued to rise. Therefore, the pair is likely to continue rising as bulls aim for the next resistance at 41.50.