EUR/USD advances following weak US retail sales

The euro has gained ground on the US Dollar following a drop in US retail sales and Treasury yields, leading to a decline in US rates and the dollar.

The EUR/USD pair trades at 1.0784, with softer Eurozone data indicating a rise in the euro. Retail sales decreased by -0.8%, worse than the predicted -0.1% decline predicted by the US Commerce Department.

Speculation about a rate cut by the US Federal Reserve is increasing due to weaker-than-expected economic data. ECB President Christine Lagarde emphasizes the importance of Eurozone wage talks, despite the trade balance showing a slight surplus.

The US Dollar Index fell 0.50% to 104.20, and the yield on US 10-year Treasury bonds fell five basis points to 4.209%. The ECB is expected to lower interest rates in 2024, although traders predict the Fed will only lower the federal funds rate (FFR) to 4.40%. The EUR/USD pair remains neutral on the daily chart, with a downward bias despite recovering from weekly lows below the 1.0700 figure.

If buyers reclaim the 100-day moving average at 1.0795, the exchange rate could open the door to testing the 1.0800 mark, while pushing the exchange rate below 1.0750 would open the door to challenging 1.0700.