EURUSD FORMS BEARISH FLAG AHEAD OF US RETAIL SALES DATA

The British pound moved sideways ahead of the upcoming data release from the UK. The data will come at a time when the UK has become the epicenter of the global stagflation crisis. There are also worries that the situation could get worse as fears of a recession rise. The Office of National Statistics will publish the latest jobs data from the UK. Economists expect the data to show that the unemployment rate declined to 3.7% while the number of claimants declined. Further, the average earnings ex-bonus and with bonus are expected to have increased to 4.1% and 5.4%, respectively. On Wednesday, the UK will release the latest inflation numbers.

The euro tilted lower as concerns about the bloc’s economy continued. There are worries that the rising energy crisis will put the bloc into a recession. Further, there are concerns that the bloc will be extremely volatile as Finland and Sweden applies to join NATO. In a statement on Monday, Putin said that he did not have any opposition to that provided that the two countries don’t install military equipment close to its borders. The euro will react to the latest Italian consumer inflation data from Italy and the important GDP and employment change from the EU. Christine Lagarde will also have a speech in which she will likely talk about monetary policy.

The US dollar remained at elevated levels ahead of the latest US retail sales numbers. Economists expect the data to show that the headline retail sales dropped to 0.5% in April. Core retail sales are expected to drop to 0.4%. The trends in retail spending have been lower as consumer price index (CPI) remains at the highest level in 40 years. The dollar will also react to the latest statements by several Fed officials like James Bullard, Jerome Powell, and Loretta Meister.

EURUSD

The EURUSD pair declined slightly as investors waited for the latest US and EU economic data. It is trading at 1.0400, which is slightly lower than this week’s high of 1.0425. The pair has moved below the middle line of the Bollinger Bands. It has also formed a bearish flag pattern that is shown in blue. The Relative Strength Index (RSI) has also pointed downwards. Therefore, the pair will likely have a bearish breakout in the near term.

GBPUSD

The GBPUSD pair has been in a tight range ahead of upcoming UK jobs data. The pair is trading at 1.2245, where it has been in the past few days. It has moved below the 25-day moving average while the Relative Strength Index (RSI) has formed a bullish divergence. The Stochastic Oscillator has moved slightly below the oversold level. Therefore, the pair will likely also have a bearish breakout.

XBRUSD

The XBRUSD pair rose to a high of 111.47, which was the highest level since May 11. The pair moved above the 25-day moving average. It is also approaching the important resistance level at 114, which was the highest level in April this year. The pair is also above the ascending trendline shown in blue. The pair will likely keep rising today.