Euro points lower ahead of Lagarde speech, US retail sales data in focus

On Thursday, retail sales in the US and jobless claims will be the focus of economic data, and ECB President Christine Lagarde will speak later in the day, while the crisis in European energy prices continued, leading to the first industrial customer shutdowns in the UK.

Europe faces a severe shortage of energy resources, as gas and electricity prices continue to rise at an unprecedented pace. With limited supplies from top suppliers Russia and Norway, Europe is running out of time to stock up on winter supplies before the cold weather begins. Asia is also competing with Europe for liquefied natural gas shipments, buying up cargoes to satisfy its own needs.

In addition, despite four months of increases in car registrations, industry data showed that July and August registrations dropped in Europe, suggesting a global semiconductor shortage affects sales in dealerships across the continent.

The euro investors are also concerned about Germany and the EU without Merkel now that she stepped down after sixteen years as Chancellor.

Eurozone industrial production remained stronger than expected in July. Still, the largest economy in Europe, Germany, is expected to grow at a slower pace this year due to supply chain problems and shortages of raw materials but is expected to rebound strongly in 2022, the DIW stated on Thursday.

DIW lowered its growth forecast for this year from 3.2% to 2.1% but predicted 4.9% growth by the end of 2022 if production constraints ease. Growth will normalize to 1.5% in 2023, according to the report.

EURUSD drops to 1.17700

EURUSD on the 4-hour chart is trading below 34 WMA within a two-week downward channel, and the price is narrowing near 1.17700 firm support at the lower line of the channel, while the Relative Strength Index (RSI) and momentum are heading south.

Should US data hit expectations, the downward movement will likely head towards the next support zone around the March lows at 1.1700.

Events of today

The investors are keeping their eyes on Lagarde's speech due at 15:00 EEST.

Retail sales data for August and weekly jobless claims will be released at 15:30 EEST on Thursday.

Retail sales are expected to have fallen 0.8% in August. In July, retail sales were up 15.8% from the same month last year, showing how strong consumer spending drove an economic recovery earlier in the year.

It is expected that initial jobless claims rose to 330,000 last week from a post-pandemic low of 310,000.