After the completion of a double bottom pattern last week on the daily chart , the Euro bulls marched on. The weakness seen in the Euro yesterday was probably a retest of the previous 1.1050 resistance area. It may be too early to confirm this but the fundamentals seem to support a bullish bias.
Last week the spread between US Treasuries yields and German Bund yields narrowed (bullish for the EURUSD).German retail sales rose 3.5% year on year in March vs a median forecast of a 3.2% year on year rise.
Although, today Eurozone retail sales fell 0.8% month on month and rose 1.6% year on year in March vs a 3.0% year on year rise in February. Slightly weaker than the median forecast of a 0.7% month on month drop. In Germany the month on month retail sales fell 2.3%. Despite this the Dollar was on the defensive as the trade deficit number widened to levels last seen in October 2008, this increase was much larger that the US governments estimate shown in the first quarter GDP report.
There may be a case for a rising Euro but despite all the bad news from the US (that was largely expected) investors will probably be looking forward and expecting the coming economic indicators to start showing some improvement in the state of the US economy. Starting with the Non Farm Payrolls coming soon. This will probably prevent any aggressive selling of the Dollar.
