- Millan Mulraine, deputy chief economist at TD Securities
Here we go, EUR/USD is refreshing this year's high, climbing to 1.3966 even despite stronger-than-expected fundamental data from the United States. While the most traded currency pair is approaching 1.40 level, Dukascopy traders still believe the market is overbought, with 69% of the opened positions being short.
It is a well-known fact that consumer spending accounts for majority of the overall economic activity in the United States, hence, retail sales data has a strong market impact. Despite positive retail sales and jobless claims, the greenback remained around a two-year low against the single currency. During February sales at American retailers advanced 0.3%, compared to a 0.2% rise expected by the market, however January's data was revised down to a 0.6% decline. Additionally, the so-called core retail sales picked up 0.3% over the period, outpacing expectations of a 0.2% gain.
Separately, a weekly report showed the number of initial jobless claims fell 9,000 to 315,000 last week, also exceeding estimates. A four-week moving average also turned lower, falling to 330,500. Unusually cold weather disrupted economic activity in the recent months, hence, economists were making bets data will surprise markets to the downside. An unexpected improvement should be the case for the Fed who seeks for additional evidence of economic strengthening to continue taper its stimulus programme.
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