Eur/USD Big Picture: Weekly Review (15-19.04.2024)

EurUsd Big Picture - Quantum Strikes
EurUsd Big Picture - Quantum Strikes

Analysis of USD Fundamentals

  1. Retail Sales YoY (Mar) – The actual data shows a 2.1% increase, which is lower than the forecast of 2.5% and significantly below the previous value of 4%. This suggests a slowdown in consumer spending growth, indicating potential economic softening.
  2. Retail Sales Ex Gas/Autos MoM (Mar) – Exceeded forecasts at 0.5% compared to an expected 0.3%, suggesting robust core consumer spending.
  3. Retail Sales MoM (Mar) – Also better than expected at 0.9% versus the forecast of 0.3%, reflecting a positive consumer sentiment.
  4. NY Empire State Manufacturing Index (Apr) – A significant underperformance with a reading of -20.9 against a forecast of -9, indicating contraction in the manufacturing sector in New York, a negative indicator for the broader economy.
  5. Retail Sales Ex Autos MoM (Mar) – Exceeded expectations at 0.6%, suggesting healthy underlying consumer demand.
  6. Building Permits (Mar) – Slightly better than expected, indicating continued strength in the housing market.
  7. Fed Chair Powell Speech – This would likely have implications based on the tone and content, impacting market sentiment towards the USD.
  8. Jobless Claims – Both initial and continuing claims came in around expectations, suggesting stability in the job market.
  9. Existing Home Sales (Mar) – Strong growth in existing home sales, which is a positive economic indicator showing a resilient housing market.

Analysis of EUR Fundamentals

  1. ZEW Economic Sentiment Index (Apr) – The index stood at 31.7, below the expected 35.9 and the previous 42.9, suggesting a deterioration in investor sentiment towards the Eurozone economy.
  2. CPI (Mar) – The consumer price index was slightly below expectations, indicating subdued inflation pressures.
  3. ECB Guindos Speech – The impact of this speech would depend on its content but generally influences market sentiment and expectations regarding ECB monetary policy.

Conclusion and EURUSD Outlook

  • USD Strengths: Retail sales data, building permits, and existing home sales indicate a relatively strong domestic economic activity. Job market stability also supports the dollar.
  • USD Weaknesses: Manufacturing data from the NY Empire State Index suggests some industrial weakness. The retail sales YoY growth slowdown could also signal a cooling in consumer spending.
  • EUR Weaknesses: Lower than expected economic sentiment and soft inflation data suggest some vulnerabilities in the Eurozone’s recovery.

Overall, the USD shows mixed but generally positive signals, indicating economic resilience despite some sectors showing weakness. In contrast, the EUR appears weaker with declining investor confidence and lower inflation, which may prompt a dovish stance from the ECB.

EURUSD Bias

Given the stronger performance in key economic indicators for the USD compared to the EUR, the bias for EURUSD would likely be towards a downtrend. This analysis suggests that traders might favor the USD over the EUR in the near term, expecting the EURUSD to potentially weaken further. This outlook could be influenced by future economic releases and central bank communications from both the ECB and the Fed.