No Love For The U.S. Dollar
U.S. retail sales increased by 9.8 percent in March, which was the second-largest increase in government data back to 1992. The huge monthly sales number can be attributed to federal stimulus payments that provided a temporary spending boost. The consumer spending boom could continue in the months ahead with consumers still sitting on a pile of accumulated savings as the economy continues to reopen.
The U.S. dollar failed to strengthen on the back of strong retail sales as Treasury yields fell.
We bear in mind, that we are still in a risk-on environment where expectations of a strong recovery are pushing equities to record levels while risky assets benefit. The anti-risk U.S. dollar, on the other hand, is not in demand in such environment.
EUR/USD – Finally due for a correction?
The euro knew only one direction in April – upwards. Now that the pair has reached a crucial resistance zone and refrained from a break above 1.20 amid its overbought situation, we expect the price to decline towards 1.19. For the uptrend to continue towards a higher resistance at 1.21, we would need to see a sustained break above 1.2020.
GBP/USD: The cable was little changed and remained below 1.38 in low volatile trading. We expect the pair to trade between 1.3850 and 1.36. As for bearish momentum, if the pound drops below 1.3720 we anticipate further losses towards 1.3670 and 1.36.
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