Today’s key fundamental factor for the USD was the retail sales data for April. They came in weaker than expected.
Granted, the March print was revised up, and was impressive, it does not represent a trend of improvement to buck the trend of negative readings seen from December through February. With a flat month in April, the doubt is mounting on whether the FOMC will be even able to raise rates in September. This is casing the USD to slide further this week.
USD/JPY has been in a range between 118.35/50 and 120.50/83. The pair was consolidating just under 120, but above the middle of this range. After the retail sales data, it fell below the center, which takes away any bullish bias it was building from last week. Now, the USD/JPY looks poised to test that 118.35-118.50 support area. If the releases on Thursday and Friday on jobless claims and consumer sentiment data disappoint, look for the USD/JPY to break that 118.35 low, which would open up the 115.45-116 multi-month consolidation support area.
The EUR/USD has been in a bullish correction basically since March when it made a low on the year at 1.0468. It accelerated in April. We saw some choppiness in May so far, but the 4H chart shows that the bullish short-term trend is still intact with price trading above the 200-, 100-, and 50-period SMAs. These moving averages are sloping up and in bullish alignment. Furthermore, the RSI has broken above 70 and held above 40, which reflects maintenance of the bullish momentum. Currently, there is upside risk in the short-term towards the 1.1450-1.1530 support/resistance area.
The USD is falling across the board. The GBP/USD is making new highs on the year. AUD/USD is breaking above 0.81 and looks poised to test the 0.8294 high on the year. Even the NZD/USD rebounded from a low on the day around 0.7315 to tag 0.75.
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