- EUR/USD fell below 1.13 on Monday, invalidating bull breakout.
- German retail sales are forecasted to rise by 0.5% in May.
- A below-forecast German data could add to bearish pressures around the EUR.
With technical charts reporting a failed breakout, EUR/USD is on the defensive ahead of the German retail sales data, due at 06:00 GMT today.
The pair closed well below 1.13 on Monday, invalidating the twin bullish cues of higher lows, higher highs and an inverse head-and-shoulders breakout confirmed on June 21.
The common currency was offered as German manufacturing PMI for June fell short of expectations, contracting for the sixth month in a row. Meanwhile, the US Dollar found love as the Sino-US trade truce tempered expectations of vert aggressive US Federal Reserve rate cuts.
Notably, the spread between the US and German 10-year government bond yields jumped more than four basis points to 239 basis points, the highest level in four weeks, boosting the greenback’s appeal.
Put simply, the common currency is looking south ahead of the German retail sales data, which is expected to show consumer spending rose 0.5% month-on-month in May, having dropped by 2% in the preceding month.
EUR/USD will likely find acceptance below the immediate support at 1.1263, as suggested by technical charts, if the German retail sales miss estimates, boosting the odds of an early rate cut by the European Central Bank (ECB). With manufacturing suffering due to trade tensions, the German economy needs consumers to chip in to avoid a marked slowdown.
A better-than-expected rebound in consumer spending could put a bid under the EUR. However, a break above the recent high of 1.1412 is needed to revive the bullish outlook. As of writing, the EUR/USD pair trading largely unchanged on the day at 1.1281.
Technical Levels
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