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Disappointing retail sales data set the tone for a weaker USD as it allowed the market to take a dovish view of the Fed funds rate. Another development supporting risk was an extension of the Gaza ceasefire. Soon after the retail sales reading the pair surged to a high of 1.3416, but this was short lived as selling resumed. That 1.3400 barrier seems to be favoured by sellers at the moment and looks like it is presenting the best value trade at the moment. The pair is back in the 1.3360 region and remains sidelined heading into GDP figures later today.
Traders favour selling
Q2 GDP figures are due out later today for Germany, France and the region; there will be some cautious trading in the single currency. While the market is pricing in growth, there is a risk we’ll see a disappointment in these figures with analysts tipping a relatively flat performance for the quarter. A round of disappointing number could present an opportunity to sell the pair on momentum, with key lows to look out for in the 1.3330 region. Once this is broken then the pair could be facing another leg lower. Alternatively, if we see a surprise to the upside, then selling rallies will still be on the cards.