EUR/USD rises on weak US retail sales

• The recovery of the Euro after the fall in US retail sales and Treasury yields.
• Speculation is mounting about a US Federal Reserve rate cut amid weaker-than-expected economic indicators.
• Lagarde, president of the ECB, highlights the importance of wage negotiations in the Eurozone, while the trade balance registers a narrow surplus.

The Euro rose in the early stages of the North American session against the Dollar, after the weaker than expected US retail sales report caused a drop in US yields and consequently , of the Dollar. The pair EUR/USD trades at 1.0784 after reaching a daily low of 1.0723.

Weaker EU data slows the rise of the Euro with an eye on central bank movements

The US Department of Commerce revealed that retail sales fell more than the estimated -0.1% contraction, coming in at -0.8% due to the winter storms. December data was revised downward, from 0.6% to 0.4%. At the same time, the US Bureau of Labor Statistics (BLS) revealed that jobless claims for the week ending February 10 stood at 212,000, below the previous reading and forecasts of 220,000.

The EUR/USD pair regained ground and rose as the 10-year US Treasury yield fell five basis points to 4.209%, while the Dollar Index (DXY) fell 0.50% to 104.20. Although there are expectations that the US Federal Reserve will cut rates in 2024, traders speculate that the Fed will slash the federal funds rate (FFR) to 4.40%.

At the European session, Christine Lagarde, president of the European Central Bank (ECB), stated that the ECB will closely follow the outcome of the upcoming Eurozone wage negotiations. On the other hand, the Trade Balance showed a surplus of 16.8 billion euros, below the 21.5 billion expected.

Other data was released in the United States: January Industrial Production fell -0.1%, below estimates of 0.3% and last month's reading of 0%.

What to expect?

Later, the ECB's chief economist, Philip Lane, will give statements. In the United States, Fed Governor Christopher Wall will speak.

EUR/USD Price Analysis: Technical Outlook

The EUR/USD daily chart remains neutral to a bearish bias despite recovering from weekly lows below the 1.0700 figure. Unless buyers recapture the 100-day moving average at 1.0795, that could open the door to testing 1.0800. On the contrary, if the bears regain control, pushing the pair below 1.0750 would open the door to challenging 1.0700.