EURUSD climbed somewhat early Tuesday.
On Monday, the EURUSD fell below 1.0900 for the first time since early July, but managed to end the day a few pips above that level. To prolong its comeback, the pair must clear the 1.0950 barrier and remain above it.
The broad-based gain of the US Dollar (USD) amid risk aversion weighed on the pair in the first part of the day on Monday. Following a gloomy start, most market indices in the US rebounded into positive territory, limiting USD gains.
Market players will be watching US Retail Sales data attentively later in the day.
Early Tuesday, investors remain wary. However, trading conditions were light on the Assumption Day vacation in Europe, preventing the EURUSD from making a meaningful move in either direction.
Retail Sales data for July will be released in the second half of the day on the US economic calendar. Markets anticipate a 0.4% gain in sales, following a 0.2% increase in June. Although a favorable report may help the USD find demand, the market reaction may be brief. This week, big retailers like Home Depot, Walmart, and Target will report profits, and a positive US Retail Sales report might assist the risk mood improve, making it harder for the USD to continue to outperform its rivals.
Technical Analysis
The RSI (Relative Strength Index) indicator on the 4-hour chart remains below 50, emphasizing the absence of rebound momentum. On the downside, 1.0900 (psychological level, mid-point of the descending channel) aligns as immediate support ahead of 1.0860 (descending channel lower limit).
On the upside, 1.0950 (the top limit of the falling channel) is a crucial resistance level. The 100-day Simple Moving Average (SMA) reinforces this level.
If the EURUSD recovers above that level and establishes it as support, it may continue its recovery to 1.1000 (psychological level, 100-period SMA on the 4-hour chart) and 1.1030 (200-period SMA).
