EUR/USD to hold 1.1270 support as superb US Retail Sales data limits dollar gains

US May Retail Sales soared by 17.7%, much better than anticipated, weighing on the greenback and boosting equities. These developments leave the EUR/USD pair trapped around the 1.13 level, FXStreet’s Chief Analyst Valeria Bednarik briefs.

Key quotes 

“Germany released its May inflation data, which was up by 0.6% in the year, but decreased by 0.1% when compared to the previous month, as expected. The Wholesale Price Index in the same month, decreased by 4.3%, worse than anticipated. Finally, the ZEW Survey showed that Economic Sentiment improved in June, as the German index came in at 63.4 while for the whole EU, it resulted in 58.6.” 

“US Retail Sales soared in May, up by 17.7% when compared to the previous month. The core reading, so-called Retail Sales Control Group, came in at 11%, beating the expected 8%. The figures, alongside with news that a common drug, Dexamethasone, seems effective against COVID-19 in serious cases, boosted equities, limiting dollar’s strength.”

“The 4-hour chart shows that EUR/USD is pressuring from above a bearish 20 SMA, while technical indicators turned south, now piercing their midlines. The 100 and 200 SMA maintain their bullish slopes below the current level.” 

“The EUR/USD pair has an immediate support at 1.1270, the 23.6% retracement of its latest daily decline, while the next Fibonacci support level comes at 1.1170. Chances of a downward move depend on whether stocks lose their positive momentum.”