Dollar demand seems to be reemerging, with major currencies retreating marginally on Friday. However, the trading activity has been muted amid the lingering trade uncertainty and ahead of key economic updates out of the Eurozone and the United States. At that, US-China trade developments remain on traders’ radars.
The European CPI data could set a short-term direction for the EURUSD pair but US retail sales report will be the key event for USD pairs in general. Should the data exceed forecasts, the release will confirm the latest statements from the Federal Reserve Governor Powell, who pointed to a strong economic activity earlier this week. If so, the dollar could appreciate along with stocks as strong numbers would cool Fed rate cut bets after the central bank lowered rates in late-October for the third time this year.
In this scenario, EURUSD could get back below the 1.10 handle and challenge the 1.0990 level, with the next support lying around 1.0970. The technical picture for the common currency will improve in case of a recovery above 1.1055. In the weekly charts, the pair is trading flat after steep losses during the previous week.
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