I would think so yes.
If a defender is adjacent to a unit that is about to get a hit from "retaliate" he could absorb that hit.
Answer would actually be "no."
Intercept Blow (Ability): When a Basic Attack damages an adjacent friendly unit, this unit can intercept that entire damage. Damage cannot be split up.
Retaliate (Ability): When attacked and hit with a Basic Atk by an adjacent unit, do 1 damage back to the attacking unit (even if this unit is defeated).
Because retaliate is an ability, and not a basic attack, intercept blow is unable to be used in this instance.
Hope that helps! Let us know if you have any other questions :-)