US retail sales and the Merge under the spotlight

EUR/USD => The pair falls below 1.00
BTC/USD => The cryptocurrency holds above 20k
Adobe => The stock falls below 400

EUR/USD awaits retail sales

EUR/USD edged a few pips higher yesterday and is trading a few pips lower today, with the pair still in consolidation mode after Tuesday’s inflation shock. Yesterday the euro shrugged off weaker than expected industrial output data and comments from ECB chief economist Philip Lane. He suggested that the coming rate raises will likely be smaller after September’s jumbo rate hike. The USD traded mildly lower following PPI, the same as the CPI: cooling headline inflation but hotter core PPI. The data suggests that inflation is much more embedded in the economy than previously thought. Today all eyes are on retail sales, which are expected to be flat for a second consecutive month amid elevated inflation.

Where next for the EUR/USD?

EUR/USD’s rebound from 0.9864 the 2022 low ran into resistance at 1.02 and has fallen lower. The taking out of the 50 sma at 1.01 and the 20 sma at 1.00, plus the bearish RSI keeps seller’s hopeful of more downside. Sellers need to take out support at 0.99 and the 2022 low of 0.9864 to extend the bearish trend. Buyers will look for a move over the 50 sma at 1.01 to target 1.02 and create a higher high.

Bitcoin and Ether hold steady with the Merge in focus.

BTC/USD is holding steady, over 20k, as investors continue to mull over US inflation data from earlier in the week and the possibility of a 1% rate hike from the Federal Reserve next week. Risk assets traded cautiously across the board, with US indices also booking minimal gains. The fact that there hasn’t been a strong rebound tells us that Tuesday’s inflation-inspired selloff wasn’t overdone. Fears of high-interest rates for longer and the impact that this will have on growth keep risk sentiment in check.  

 ETH/USD is steady but modestly outperforming bitcoin, as it trades up 1%, above 1600 just ahead of the keenly awaited Merge; the technological overhaul to proof of stake protocol. This upgrade away from proof-of-work promises to make the network cheaper, cleaner, and more sustainable – more fitting with today’s climate. However, while dramatically lowering Ethereum’s power consumption and carbon footprint, Ether will lose an income stream. Looking at the price action, ETH/USD is holding steady after booking solid gains back in July when the Merge was priced in. As a result, we could expect some choppy trade today, but no knee-jerk reaction is expected. A range-bound consolidation could be in store over the coming weeks. The Merge could be more of a longer-term playout in the price as the upgrade is likely to attract more institutions, which could benefit ETH/USD price over a longer term.

Adobe Q3 earnings preview

Adobe will release Q3 earnings after the close today. The software firm trades 47% off its highs heading into earnings as investors wait to see whether the strength in the cloud computing segment can be maintained. In Q2, Adobe achieved record revenue thanks to strong demand across this segment. However, Adobe also reduced its outlook when it released the last update owing to factors such as the war in Ukraine and the strong dollar. Given that these factors have deteriorated further, there is a good chance of another downward revision in the outlook. In Q3, Wall Street is expected to report EPS of $3.34 on sales of $4.44 billion.

Support can be found at 363 (weekly low) and 348 (2022 low).

Resistance for the stock can be seen at 401 (50 sma) and 450 (August high).