- U.S Retail Sales Jump
- FED Chair Warning
- Economic release watch
EUR/USD bounce-back to three-month highs stalled late Tuesday as the dollar strengthened across the board on U.S retail sales in May jumped far more than expected. The pair was trying to recover after plunging below the $1.13 handle as the Euro came under pressure.
EUR Under Pressure
The pair has remained range-bound in recent weeks after breaking through the $1.13 level. However, a lack of new catalysts has caused the pair to struggle to rally past the $1.14 psychological level. The bullish momentum has appeared to lose momentum in recent weeks awaiting new catalysts.
EUR/USD bullishness remains under pressure as a resurgent dollar continues to curtail further upside action. The indication that the US. The economy is on a recovery path in the aftermath of the COVID-19 pandemic, continuing to fuel strength in the U.S dollar.
Economic data in the recent past have beat expectations, affirming chatter that monetary policies are indeed working. For instance, U.S retail sales jumped the most in May, increasing by 17.7%, outstripping economists’ median forecast of 8%.
Clothing and accessories registering a 188% increase all but implied U.S consumers’ willingness to spend amidst the COVID-19 pandemic. Sporting goods, hobby as well as musical instruments sales were also up by 88.2%.
FED Chair Dovish Outlook
Federal Reserve Chairman Jerome Powell is warning that the U.S economy faces a long road to recovery aroused risk sentiments in the market. According to the FED chair, the U.S economy will not recover fully until the U.S people are sure the novel coronavirus has been brought under control.
Concerns about coronavirus continue to drive strength in the U.S dollar, conversely sending the EUR/USD pair lower. The dollar has always performed against the EUR and other major currencies in times of crisis, such as the Coronavirus pandemic.
Wednesday promises to be a busy day for the EUR/USD, with a series of economic releases poised to hit the wires. The market awaits the release of the Core inflation Rate YOY expected to sway the trader’s sentiment on the EUR. Similarly, the release of the U.S Building Permits for May as well as Housing Starts should have an impact on the dollar conversely the Eur.