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EUR/USD Forecast 18 Feb 21

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I wanted to provide a quick update as the US Retail Sales turned out to be much better than expected.

EURUSD hourly chart.

Technical Analysis

In this EUR/USD hourly chart, we see the currency pair dipped sharply yesterday as the much better than expected USA Retail Sales resulted in a knee-jerk reaction.

The EUR/USD is now heading towards the upside, possibly targeting 1.21.

As I mentioned yesterday, the synergy of the lower bollinger band and 1.2 did result in a strong support.

Sentiment Analysis

The USA Retail Sales data turned out to be 5.3% instead of 1.1%. Positive sentiment was likely generated as investors gained confidence in the economic recovery. Retail sales is a fundamental component of the economy and is closely monitored by many. As consumers spend, it translates to revenue and flows upstream as salaries, wholesales purchase, production orders, and so on.

The initial dip was a sentimental reaction by investors as the positive news for the US economy is good for the US dollar. Having said so, I always mentioned the importance of understanding the market sentiment. The current economic climate usually rewards the riskier currencies when risk appetite increases. Hence the EUR/USD is now climbing. It is vital that you keep a close watch on the market pulse to avoid false momentum and unnecessary loss of capital.

The Week Ahead

There are important economic events this week. I highly encourage you to read through and learn about these events. This helps improve your understanding of the market sentiment.

USA FOMC Meeting Minutes
Monetary policy meeting minutes are given much attention by analysts and investors as it has an impact on the economy. The minutes will be analyzed thoroughly for insights on the economic policy ahead. Significant volatility may be generated if there are unexpected revelations.

USA Philly Fed Manufacturing Index
This survey of manufacturers is important as the sentiment of businesses is a leading indicator of economic health. A healthy sentiment suggests that an economy is moving along well and with the activities of the businesses, downstream benefits will happen such as employment and investment.

USA Crude Oil Inventories
This gives insight into the supply and demand of oil, which may tell us more about the economy’s health. An expanding economy typically uses more oil, while a contracting one may result in significant excess.

EUR French Flash Services PMI
EUR French Flash Manufacturing PMI
EUR German Flash Manufacturing PMI
EUR German Flash Services PMI
EUR Flash Manufacturing PMI
EUR Flash Services PMI
USD Flash Manufacturing PMI
A Purchasing Managers’ Index is a survey of purchasing managers and is important as the sentiment of purchasing managers is a leading indicator of economic health. A healthy sentiment suggests that an economy is moving along well, while a cautious sentiment may see fewer business activities because of prudence.

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