Trading the News: USD Retail Sales to Increase for Sixth Time in 2014

What’s Expected:



Why Is This Event Important:

A marked picked up in private sector consumption may encourage the Federal Open Market Committee (FOMC) normalize monetary policy sooner rather than later, and we may see a growing number of central bank officials adopt a more hawkish tone for monetary policy as the board looks to conclude its asset-purchase program at the October 29 meeting.

How To Trade This Event Risk
Bullish USD Trade: U.S. Retail Sales Climb 0.6% or Greater

• Need red, five-minute candle following the release to consider a short trade on EUR/USD
• If market reaction favors a long dollar trade, sell EUR/USD with two separate position
• Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward
• Move stop to entry on remaining position once initial target is hit; set reasonable limit

Bearish USD Trade: Household Consumption Disappoints

• Need green, five-minute candle to favor a long EUR/USD trade
• Implement same setup as the bullish dollar trade, just in the opposite direction

Potential Price Targets For The Release
EUR/USD Daily

• Will continue to favor downside targets as RSI holds in oversold territory & retains bearish momentum.
• Interim Resistance: 1.3220 (50.0% retracement) to 1.3230 (61.8% retracement)
• Interim Support: 1.2800 pivot to 1.2810 (61.8% expansion)

Impact that the U.S. Retail Sales report has had on EUR/USD during the previous month

July 2014 U.S. Advance Retail Sales
EURUSD M5 : 50 pips price movement by USD - Retail Sales news event