A small increase in retail sales in Australia in May of this year did not support the Australian dollar, which declined throughout the day on Thursday against the US dollar from its highs around 0.7050. The upward trend in the pair has been observed since the middle of last month, even despite statements by the Reserve Bank of Australia to lower interest rates, which was done this Tuesday.

According to the report of the Australian Bureau of Statistics, retail sales in Australia increased by only 0.1% in May 2019 compared with the previous month. Weak growth is directly related to the fact that consumers are less actively spending money. A particularly strong decline in sales was recorded in department stores, while an increase in expenses was noted for the purchase of household goods and in catering establishments.

Let me remind you that quite recently the Reserve Bank of Australia decided to lower interest rates in order to stimulate economic growth against the background of the deteriorating global economic outlook. Currently, the RBA rate is at the level of 1.00%.

The central bank is counting on inflation but also falls short of the target value. This saves the likelihood of further interest rate cuts. It is expected that in the 3rd quarter of this year, growth will be no more than 1.5% compared to last year, which is at odds with the goal of the RBA at 2% -3%.

As for the technical picture of the AUD/USD pair, bears are unlikely to allow the trading instrument to continue growing without a proper downward correction. An unsuccessful consolidation and return below the resistance of 0.7050 will increase the pressure on the pair and return to the support of 0.6960 and 0.6920, where buyers will try to form a larger level of support for the further medium-term strengthening of the Australian dollar.

The European currency against the US dollar traded in a narrow side channel after the holiday in the US.

Yesterday's data on retail sales in the euro area, which fell in May this year for the second month in a row, did not put serious pressure on the euro and the fact that the ECB may soon launch a bond redemption program.

The reduction in retail sales is direct evidence of a slowdown in the economy of the currency bloc in the 2nd quarter.

According to the Bureau of Statistics of the EU, retail sales fell by 0.3% in May compared to April, where a decrease of 0.1% was recorded. Strangely enough, the strongest decline in sales was observed in Germany, where the figure dropped immediately by 0.6% compared to the previous month, while the strongest growth of 0.4% was recorded in France.

As I noted above, the European Central Bank will announce the resumption of the quantitative easing program in the near future. However, weaker macroeconomic data are required for the real launch of this kind of economic stimulation measures.

The only thing that can keep the European regulator from launching the program is the solution to the trade conflict between the United States and China, which negatively affects the global economy, as well as the stabilization of macroeconomic data in the 3rd quarter of this year.

As for the technical picture of the EUR/USD pair, the bears did not succeed in breaking through the support of 1.1275 and therefore, the entire emphasis remains precisely at this level. Only a breakdown of the range at 1.1275 will lead to a larger downward bearish impulse with an output of 1.1240 and 1.1200 lows. In an upward correction scenario, major resistance levels are seen in the highs of 1.1310 and 1.1340.