EUR/USD erases US retail-sales-inspired gains, steadies below 1.13

• Retail sales data from the U.S. disappoint on Thursday.
• US Dollar Index finds support near 97.
• Germany economy expands less than expected in Q4.

The EUR/USD pair came under pressure in the early European session and slumped to mid-1.12s on disappointing growth data. With the greenback coming under sudden selling pressure in the second half of the day following the retails sales data from the U.S. the pair recovered above the 1.13 mark but struggled to hold there. As of writing, the pair was up 0.15% on a daily basis at 1.1282.

According to Germany’s Destatis preliminary estimate, the German economy stagnated on a quarterly basis in the fourth quarter and the annual growth rate slumped to 0.9% from 1.1%. Additionally, the GDP in the euro area expanded by 1.2% on a yearly basis in the fourth quarter to match the market consensus.  

On the other hand, retail sales in the U.S. declined by 1.2% in December and missed the analysts’ estimate for a 0.2% growth by a wide margin. The US Dollar Index, which advanced to a fresh 2019 high of 97.30 ahead of the data, lost its traction and dropped to the 97 area. Other data from the U.S. showed that the annual PPI fell to 2% in January from 2.5% in December and weekly jobless claims increased by 4K to 239K in the week ending February 8.

However, a modest rebound witnessed in the 10-year T-bond yields helped the US Dollar Index recover and didn’t allow the pair to stay above 1.13. At the moment, the DXY is at 97.10, still down 0.1% on the day.

Technical outlook by FXStreet Chief Analyst Valeria Bednarik

The EUR/USD pair jumped above 1.1300 with softer-than-expected US data and could extend the current advance according to technical readings in the 4 hours chart, as the price is surpassing a still bearish 20 SMA, while technical indicators head north, the Momentum crossing above its mid-line and the RSI currently at around 48. Nevertheless, the dominant bearish trend remains firmly in place. The pair can extend its recovery up to the 1.1340 price zone, should it break above 1.1310, or turn bearish on renewed weakness below 1.1260, the immediate support.

Support levels: 1.1260 1.1215 1.1180

Resistance levels: 1.1310 1.1345 1.1380