The pair is up 0.3% now to 1.1270 at the highs for the day, with the dollar keeping slightly lower across the board. The gains are now starting to run into the 61.8 Fib retracement level of the swing lower from 2021 to 2022, seen at around 1.1274:
EUR/USD weekly chart
I wouldn’t label that as a major resistance level, especially if you pit it against the 200-week moving average (blue line) and the 1.1200 mark – both of which was broken last week already.
Nonetheless, it is still a technical reference that sellers can lean on. But for now, it seems buyers are looking to make a play once again and rather impatient. We still do have the US retail sales data to come later today.
But given the circumstances, it is hard to imagine that as being a game changer for the Fed outlook and in this case, overall dollar sentiment itself.
Traders are still very much convinced of a 25 bps rate hike next week and that isn’t likely going to change on this report. I mean a softer set of CPI figures last week also wasn’t enough to convince markets to back down, so why would this?
As such, a good set of numbers will continue to point to the fact that the US economy is still holding up very well. And that’s a narrative we have grown accustomed to in the past few months, allowing for the Fed to easily brush aside the banking crisis to keep hiking rates.
And even in the case of a poor set of numbers, it is just one month’s worth and I don’t imagine that as being overly positive for the dollar at the moment considering its technical vulnerabilities.