Despite everything, the dollar continued to strengthen its position. On a yearly basis, retail sales contracted by 1.2% from -2.9% in the euro area. This refers to the growth in consumer activity, which is the engine of the entire economy. Moreover, US employment increased by only 103,000, which is quite small, as, on average, it should grow by about 250,000 per month to maintain labor market stability. Over the last four months, it has grown by a total of 478,000. So, the dollar's broad strength is starting to raise several questions. Of course, one can attribute it all to speculation, but this is quite a weak explanation. Most likely, it is due to the ongoing reassessment of expectations regarding the future dynamics of interest rates. And one that will not work in favor of the eurozone, although European Central Bank officials have suggested that there should be no rate cut by the end of the year. However, this has only led to a slowdown in the growth of the US currency.
Today's eurozone GDP data is unlikely to change as much since it is the third estimate, which should only confirm the two previous ones. The market has long since taken them into account. But the US jobless claims may garner some investor interest. The total number may increase by 20,000. Considering the rather weak employment growth, this will further convince investors that the labor market situation is clearly deteriorating, and they should prepare for rising unemployment. In turn, this could lead to a recession. However, it is not advisable to rule out how persistent the momentum is. Nevertheless, due to the recent economic reports, the scale of the dollar's growth will be even more modest.
The EUR/USD has not only settled below the 1.0800 level but has also managed to extend the ongoing corrective cycle.
On the four-hour chart, low RSI levels indicate the euro's oversold conditions within the intraday period. In the medium-term period (1D), the RSI downwardly crossed the 50 middle line, indicating a shift in trading interests due to the corrective move.
On the four-hour chart, the Alligator's MAs are headed downwards, which corresponds to the bearish cycle.
OutlookContrary to the oversold signal, the euro continues to decline in value, indicating speculative interest driven by momentum. In case the euro falls further, the price could move towards 1.0700. However, it's important to consider that ignoring the oversold signal may eventually lead to the closure of short positions, which, in turn, could result in an intense price rebound.
The complex indicator analysis points to the corrective cycle in the short-term, medium-term and intraday periods.