EUR/USD and GBP/USD Price Forecast: UK Retail Sales Dip, Focus on US UoM Consumer Sentiment

Highlights

• Surprising UK retail sales drop and German PPI fall reflect economic strain, casting shadows over the Euro and Pound.
• US economic resilience highlighted by falling unemployment claims and robust building permits, despite Dollar’s narrow trading range.
• Upcoming U.S. consumer sentiment and Eurozone’s leading index data set to provide new directional cues for EUR/USD and GBP/USD.

UK Retail and German PPI Slips; Eyes on U.S. Economic Data

During the early European session, the UK retail sales unexpectedly plummeted by 3.2% m/m, a stark deviation from the projected -0.5%.  Alongside, the German PPI m/m also declined by 1.2%, suggesting deflationary tendencies within Europe’s economic powerhouse, exceeding the expected 0.4% to 0.5%.

The US Dollar is consolidating in a narrow range between $103.250 and $102.850 despite the release of positive economic data. US Unemployment Claims have dropped to 187K, significantly below the forecast of 203K, reflecting a robust labor market. Concurrently, Building Permits have risen to 1.50M, surpassing expectations and indicating a healthy construction sector.

Events Ahead

As the market looks towards January 19, focus shifts to the US Prelim UoM Consumer Sentiment and Existing Home Sales for further economic clues. In Europe, ECB President Lagarde’s comments at Davos will be scrutinized for future policy indications, while the UK’s CB Leading Index m/m could sway GBP valuations.

US Dollar Index (DXY)

The US Dollar Index is experiencing consolidation within a tight range, fluctuating between $103.250 and $102.850. Underpinning the buying sentiment is the upward trendline alongside the 50 EMA and 200 EMA, currently situated at $102.534 and $102.481, respectively. A decisive breakout above the $103.250 level could potentially spark a fresh wave of buying interest, propelling the Dollar towards the $103.850 mark.

EUR/USD Technical Forecast

On January 19, the EUR/USD pair showed a modest increase, trading at $1.08790, up by 0.02%. Analyzing a 4-hour chart timeframe, key price levels have emerged. The pivot point is identified at $1.09056, with immediate resistance levels set at $1.09455, $1.09939, and $1.10383. Meanwhile, support levels are found at $1.08452, $1.08006, and $1.07552.

The 50-Day and 200-Day Exponential Moving Averages are closely aligned at around $1.09133 and $1.09132 respectively, indicating a tight range for potential price action. A bearish bias is observed in the EUR/USD pair, with a downward trendline likely capping any upward movement near the $1.09056 mark.

GBP/USD Technical Forecast

The GBP/USD pair currently trades at 1.26789, marking a 0.22% decline in the last 24 hours. The 4-hour chart reveals critical price levels with the pivot point at $1.27116. Resistance is formed at $1.27403, $1.27829, and $1.28263, while support lies at $1.26662, $1.26392, and $1.25941.

Technical indicators show the 50-day EMA at $1.26951, slightly above the current price, and the 200-day EMA at $1.26519, just below it. This proximity to major moving averages indicates a possible consolidation phase.

Chart analysis reveals a 61.8% Fibonacci retracement around the $1.27116 level. The GBP/USD’s closure below this pivot point could trigger further selling pressure, while a bullish breakout above this level might propel the pair towards the next resistance levels.