US retail sales stalled in June, according to the latest data from the Census Bureau. Defying economists’ estimates of a -0.3% fall (Reuters poll), the flat print follows May’s upwardly revised reading of +0.3%.

Excluding autos, retail sales increased by +0.4% in June, bettering May’s upwardly revised reading of +0.1% and market expectations of a flat print. Retail sales, excluding autos and gas, increased by +0.8%, beating May’s upwardly revised +0.3% and exceeding the consensus estimate of +0.2%.

Year-on-year retail sales for June were up by +2.3%, down from an upwardly revised +2.6% in May.

Digging further into the release, 3 out of 13 categories registered a decline in sales. According to the report, between May and June, gasoline sales took a hit, down -3.0%, closely followed by declines in Motor vehicle and parts dealers as well as sporting goods. However, sales increased at nonstore retailers, up +1.9% in the month, followed by a jump in building materials sales and in health and personal care stores.

The retail control group was up +0.9% in June, comfortably north of the consensus estimate of +0.2% and +0.4% prior in May. Notably, the control group is a significant component used to calculate US GDP, a release that excludes autos, building materials, gas stations, mobile homes and tobacco stores.

EUR/USD Testing the Mettle of Daily Resistance

Following the release of the data, Europe’s single currency (EUR) fell versus the US dollar (USD). With a Fed rate cut still fully priced in for September (-28 basis points of easing currently priced in), the EUR/USD currency pair is challenging resistance on the daily timeframe between $1.0920 and $1.0883. As you can see, sellers have been reluctant to commit to said resistance, emphasising a potential continuation move north in the direction of an AB=CD resistance level at $1.0982 (shown by way of a 100% projection ratio), which is closely shadowed by another layer of resistance from $1.1019, and then a small Fibonacci cluster around $1.1067ish. To the downside, support warrants attention at $1.0792.

With the US Dollar Index testing the underside of the 200-day simple moving average (SMA) at 104.42 and threatening to consume daily support from 104.09, further buying could be seen on the EUR/USD. This could unlock the door for breakout buying north of current resistance, targeting the AB=CD resistance at $1.0982 as the initial upside objective.

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