The Euro (EUR) extended downside movement against the US Dollar (USD) on Monday, dragging the price of EURUSD to less than 1.1225 following the release of some key economic news. The technical bias remains bullish in the short term because of a Higher High and High Low in the recent wave.

Technical Analysis

As of this writing, the pair is being traded around 1.1221. A support may be seen near 1.1113, the 50% fib level ahead of 1.1050-1.1058, the confluence of psychological number as well as 50% fib level as demonstrated in our daily chart.

On the upside, the pair is likely to face a hurdle near 1.1252, the 61.8% fib level ahead of 1.1376, the swing high of the last major upside rally and then 1.1400, the psychological number. The technical bias will remain bullish as long as the 1.0710 support area is intact.

US Retail Sales

US retail sales rose modestly for the third straight month in January despite falling gasoline prices, the Commerce Department reported Friday. Shoppers spent 0.2 percent more on retail and food services, following an upwardly revised 0.2 percent increase in December. Retail sales totaled $449.9 billion in January, up 3.4 percent from a year ago, according to the data that is not adjusted for price changes.

The January data showed a 3.1 percent drop in gasoline sales at the pump. Auto sales rose 0.6 percent; ex-auto, retail sales were up a meager 0.1 percent. Sales in general merchandise stores rose 0.8 percent, almost wiping out December’s decline, but department stores saw sales fall 0.8 percent.

Trade Idea

Considering the overall technical and fundamental outlook, selling the pair around current levels appears to be a good strategy in short to medium term.

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