EURUSD formed lower highs and higher lows inside a symmetrical triangle on its short-term time frame, indicating that a breakout is due soon. Price is approaching the peak of the formation, and technical indicators favor a bearish move.
The 100 SMA is below the 200 SMA to indicate that the path of least resistance is to the downside or that support is more likely to break than to hold. A move below the 1.1800 level could be enough to confirm that a selloff of the same height as the triangle is due.
Stochastic is still on the move up but closing in on the overbought zone to reflect exhaustion among buyers. Turning lower would mean that sellers are back in the game and could sustain the drop. RSI is on middle ground and moving sideways to reflect consolidation.
Note that the 200 SMA lines up with the triangle top around 1.1825 to add to its strength as resistance.
The upcoming US retail sales release might be enough to spur a breakout for this pair, as weaker consumer spending figures are eyed. Headline retail sales could slide by 0.7% while the core figure could show a 0.1% dip in August. This comes after a 1.1% decline in headline retail sales and a 0.4% reduction in core retail sales for July.
Keep in mind that the NFP figure missed expectations for the previous month, so weaker job conditions likely contributed to lower retail sales figures. If so, traders could push back expectations for a Fed taper in October or November.
Stronger than expected data, on the other hand, might revive hopes that the central bank could unwind stimulus as early as next month.
There are no major reports due from the eurozone, but it’s worth recalling that the ECB refrained from giving a timeline for their taper plans.