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  • Upbeat data from Germany and euro area helped EUR gather strength.
  • US Dollar Index looks to close in red following modest rebound.
  • Coming up on Wednesday: Retail Sales and CPI from eurozone.

After spending the Asian session moving sideways near 1.1170, the EUR/USD pair gained traction on the back of upbeat macroeconomic data releases from Germany and the euro area and reached a daily high of 1.1206. With the greenback gathering strength during the American trading hours, the pair retreated from its highs and was last seen trading at 1.1190, adding 0.3% on a daily basis.

Service sector remains healthy in Europe

Following a decline of 1.9% in October, Retail Sales in Germany rose 2.1% on a monthly basis in November to beat the market expectation of 1% by a wide margin. Additionally, the IHS Markit’s Services PMI in December’s final reading improved to 52.9 and 52.8 in Germany and the eurozone, respectively, to help the shared currency outperform its major rivals.

In the second half of the day, the IHS Markit announced that the economic activity in the US’ service sector expanded at a more robust pace than previously estimated with the PMI advancing to 52.8 from 52.2. The US Dollar Index, which slumped toward the 96.50 handle earlier in the session, staged a rebound after the strong PMI reading and made it difficult for the pair to stay above the 1.1200 mark.

On Tuesday, the Eurostat will release the inflation report and the Retail Sales figures. Markets expect the core Consumer Price Index (CPI) to remain unchanged at 1.3% on a yearly basis in December. In the second half of the day, the ISM Non-Manufacturing PMI from the US will be looked upon for fresh impetus.

Technical levels to watch for