EUR/USD retreats from 0.9880

The euro retreats below 0.9850 after previously failing to hold at 0.9880. The positive market sentiment has acted as a tailwind for the euro.

The EUR/USD pair’s recovery from last week’s lows at 0.9635 has lost momentum below 0.9900 and the pair pulled back to 0.9850 on Tuesday’s afternoon US Trading session. The euro, however, is still moderately positive on the daily chart.

The euro managed to extend gains in the early European session, pushing the pair to session highs at 0.9875. European and US stock markets have advanced for the second consecutive day as the enthusiasm for Britain’s U-turn on the tax cuts plan is offsetting concerns about the deterioration in the global economic perspectives.

The mixed German ZEW report, which has shown better than expected sentiment readings in Germany and the Eurozone, while the current situation view has deteriorated beyond expectations, has not dented the EUR recovery.

In the United States, the better than expected industrial data offered some break to the USD. Industrial production increased 0.4% in September versus expectations of a 0.1% increment.