EUR/USD Analysis: Industrial Output Decline and Dollar Rebound Amidst Economic Data
InstaForex Analysis 16.11.2023 14:26
Industrial output in the eurozone fell more than expected, as total production dropped 1.1% on month in September, while forecasts were for output to be down 0.8% on month. However, this report did not lead to any noticeable movements in the foreign exchange market. Investors were clearly waiting for US data, the forecasts for which also carried a negative tone, as they intended to extend the dollar selloff.
However, the annual trend in retail sales slowed from 4.1% y/y in September to 2.5% y/y in October, whereas a slowdown from 3.8% to 2.1% was expected. So not only were the actual reports better, but the previous results were also revised for the better. Afterwards, a full-fledged rebound started, and the dollar was able to improve its position.
The only thing we can highlight for today is the initial jobless claims in the United States. The total number is expected to increase by 8,000. The changes are extremely insignificant and are unlikely to have a serious impact on the current situation. Considering that the rebound is not yet complete, we expect the dollar to gradually rise further.
The EUR/USD pair has entered a retracement phase due to the high overbought levels.
The level of 1.0900 acts as resistance, and we observed a decline in the volume of long positions near this area. On the four-hour chart, the RSI downwardly crossed the 70 line. This technical signal indicates that the euro's overbought conditions have started to ease, given that a retracement phase is being formed.
On the same time frame, the Alligator's MAs are headed upwards.
The signal corresponds to the upward cycle, ignoring the ongoing retracement. Outlook The ongoing retracement persists, which is why traders are considering a scenario with the pair moving towards the level of 1.0800. The succeeding movement will depend on the price's behavior near this level—whether sellers can keep the quotes below it or if the level will act as support.
The complex indicator analysis points to the retracement phase in the short-term and intraday periods.