06.05.201916:24 Forex Analysis & Reviews: EURUSD: Weak retail sales will affect the final eurozone GDP for the first quarter of 2019

The European currency continued to trade in the side channel in pair with the US dollar, completely ignoring the weak data that came out today in the eurozone. The report on retail sales also disappointed investors.

According to Markit, the Purchasing Managers Index (PMI) for Italy in April of this year dropped immediately to 50.4 points, close to the mark of 50 points, below which activity will decline sharply. Back in March, the index was 53.1 points. Economists had forecast it at the level of 51.9 points.

In France, the same PMI index for the service sector in April returned to the level of 50 points and amounted to 50.5 points against 49.1 points in March. The data completely coincided with the forecasts of economists.

Germany continues to hold the overall index of the eurozone and maintains growth in the service sector. According to Markit, the Purchasing Managers Index (PMI) in Germany rose to 55.7 points in April against 55.4 points in March. The data almost coincided with the forecasts of economists, who expected the index at the level of 55.6 points.

As for the general index for the eurozone, there is a reason for concern. The Purchasing Managers Index (PMI) for the eurozone services sector fell to 52.8 points in April, while in March it was 53.3 points. The index was forecasted at the level of 52.5 points. The eurozone composite PMI fell to 51.5 points in April against 51.6 in March and the forecast of 51.3 points.

Despite a wide range of indices, all the attention of traders was still focused on the report on retail sales in the eurozone. Sales were forecasted to fall by 0.1%, and if the March figure was worse than expected, the pressure on the euro would have increased. However, the report indicated that retail sales in March of this year remained unchanged compared with February and increased by 1.9% compared with March 2018. Weak retail sales will certainly contribute to the final estimate of eurozone GDP for the first quarter of this year, which will hit the euro in the future.

Given that no important fundamental statistics are planned for the afternoon, much will depend on the further development of the trade conflict between the US and China. Let me remind you that quite recently, the President of the United States, Donald Trump, once again threatened to raise duties on Chinese goods. If trade negotiations suddenly break down for any reason, this is unlikely to have a positive effect on the US economy, which will force the Fed to resort to lowering interest rates, which have recently been spoken by quite a lot of committee representatives.

As for the technical picture of the EURUSD pair, further prospects for the movement of the trading instrument seem vague. Bears can prove themselves after returning and updating the resistance level of 1.1220, while the bulls will be clearly set to hold large support of 1.1160, from which an attempt will be made to build the lower limit of the new upward channel. The goal will be to update last week's highs in the area of 1.1290.