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Market Insights

Trading Insight: Focus shifts to ECB and US retail sales

The Skilling NFP Preview - October 2023

EUR/USD Talking Points

  • ECB interest rate decision due 14:15 CET (12:15 GMT)
  • US PPI and retail sales - 14:30 CET
  • EUR/USD at risk - price action turns cautious in the build up to key event risk

Can ECB and US retail sales help EUR/USD break out of the current range?

The highly anticipated September ECB rate decision is on today’s economic agenda, where the governing council of the European Central Bank will announce the key interest rates.

With analysts expecting rates to remain at current levels, the recent increase in the three-year inflation expectations have placed the European central bank in a difficult position.

Despite the continual efforts to tame price pressures through aggressive monetary tightening, both the ECB and the US Federal Reserve remain committed to drive inflation back to their objective target of 2%. With borrowing costs in the Euro Zone rising by 4% since July last year (from 0.25% to 4.25%), another 25 basis point hike would take rates to the highest levels since 2001.

Key event risk for EUR/USD

Economic Calendar

Meanwhile, in between the ECB rate decision and the press conference that follows, monthly PPI (purchasing price index) and retail sales data will be released out of the United States, which could provide an additional catalyst for price action. With US PPI expected to rise from 0.3% to 0.4%, forecasts expect retail sales to have declined to 0.2% in August.

However, with the Fed preparing for the FOMC meeting next week, any surprises to the upside could raise expectations for the Fed to raise rates next week.

EUR/USD technical analysis

At the time of writing, EUR/USD is trading in a tight range of support and resistance, around the 1.073 handle. With the next level of support resting at the key psychological level of 1.070, a move above 1.073 could open the door for a potential retest of 1.080, coinciding with trendline resistance from the July move.

In contrast, a break of 1.0700 could assist in providing sellers the opportunity to drive prices back to prior support in May, at around 1.0635.

EUR/USD daily chart

EURUSD Daily chart
Chart prepared on TradingView

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Not investment advice. Past performance does not guarantee or predict future performance.