US Retail Sales preview: what to expect of EUR/USD

US Retail Sales for the month of August are due later in the NA session. Market bets point to a monthly contraction of 0.2% during last month, dropping from July’s flat reading. Core sales – stripping the Autos sector – are seen gaining 0.2% during the same period and at the same time reverting the 0.3% drop seen in the previous month.

According to ‘Rates FX and Commodities Strategy’ at TD Securities, “A more cautious print would also extend the weakness in consumer spending to a second month, challenging a core pillar of the Fed’s growth thesis over the second half of the year. This leaves the USD vulnerable against the EUR and the JPY. A weak retail sales print is also likely to undermine the commodity complex and its associated currencies”.

Regarding FX, EUR/USD is struck within the recent range around the mid-1.1200s, with gains initially capped around the 1.1300 barrier, where sits the resistance trend line off 2016 top. On the opposite direction, the immediate support appears near 1.1200, home of the 2014-2016 support line.