The EURUSD pair was little changed today as traders reacted on the mixed data from Europe and the actions by the Fed. Traders are now waiting for the important retail sales data from the United States.
Fed adds more stimulus
The EURUSD pair rose sharply during the American session after the Fed announced new measures to support the economy. The bank announced that it would now start buying corporate bonds in the secondary market in a bid to provide more liquidity in the market. Before this, the bank was acquiring corporate bonds through ETFs.
Such a move tends to be negative for the US dollar because it increases chances that the Fed will implement negative interest rates.
The decision came on a day in which investors were worrying about a second wave of coronavirus. Later today, Jerome Powell will likely address the thinking behind the decision and other actions that he is prepared to do.
We will also receive the important retail sales data from the United States. Analysts expect that retail sales increased by 8.0% in May after declining by 16.4% in the previous month.
European mixed data
The EURUSD is also reacting to the mixed data from Europe. According to Eurostat, wages in the eurozone increased by 3.4% in the first quarter. This was a significant gain after the 2.4% increase recorded in the previous quarter. The labour cost index also increased by 3.40% after increasing by 2.30% in the fourth quarter.
Another data released by ZEW showed that economic sentiment in the region improved to 58.6 this month. This is mostly because business leaders hope that the reopening will lead to more business. In Germany, the sentiment increased to 63.4. The current conditions improved from the previous -93.5 to -83.1.
On the daily chart, the EURUSD pair has found some resistance near the 78.6% Fibonacci retracement level. This resistance is mostly because there seems to be indecision between the bulls and bears in the market. As a result, a pattern eerily similar to a bullish flag is forming. The price is still above the 50-day and 100-day EMA. This means that the levels to watch are 1.1425 and 1.1211. A move above the former will see the price continue rallying while a move below the latter will see it drop.