There is an adage on Wall Street: “Never underestimate the American consumer”., which appears appropriate for January’s retail sales data

Headline US Retail Sales for January were up 3.8% MoM vs an estimate of only 2% MoM. This was the biggest jump since March 2021. In addition, December’s print was revised lower from -1.9% MoM to -2.5% MoM. Also, January’s Retail Sales ex-Autos was 3.3% MoM vs 0.8% MoM expected and -2.8% MoM in December. Many analysts had estimated that a higher expected headline number would be due to the increasing auto sales (and increasing costs to auto sales), however that doesn’t seem to be the case. Retail sales ex-Gas and Autos were even stronger at 3.8% MoM vs 0.4% MoM expected! These numbers would suggest that people were spending in January, despite higher prices due to inflation!

EUR/USD is hovering just above the 50 Day Moving Average at 1.1328 and the top, downward sloping trendline of the channel that the pair has been in since May 2021. Horizontal resistance sits at today’s highs near 1.1395. If EUR/USD can trade above today’s highs and the horizontal resistance, it may be wide open for a move back to 1.1500, which has been capping any rallies as of late. Resistance is at the February 10th highs of 1.1497 (very close to 1.1500). Above there, resistance on the daily timeframe is at the 127.2% Fibonacci extension from the highs of January 14th to the lows of January 28th, near 1.1581, and then the 200 Day Moving Average at 1.1649.

Source: Tradingview, Stone X

On a 240-minute timeframe, first support is at the top, downward sloping trendline of the long-term channel near 1.1300. Below there is a confluence of support at the February 14th lows, horizontal support and the 61.8% Fibonacci retracement from the lows January 28th to the highs of February 10th between 1.1263 and 1.1280. If price breaks below there, if can fall to horizontal support at 1.1186 and then previous lows at 1.1121.

Source: Tradingview, Stone X

There is an adage on Wall Street: “Never underestimate the American consumer.” That saying appears to fit the outcome of the January Retail Sales data. With the actual readings beating estimates across the board, one must consider that the rise may have to do as much with the demand for products as it does with the prices Americans are paying for the products!