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EUR/USD falls below 1.1550 as markets react to mixed U.S. data and heightened geopolitical tensions.
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May’s U.S. Retail Sales declined by 0.9%, though the core control group rose 0.4%, while industrial production underwhelmed.
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Traders remain cautious ahead of Wednesday’s Federal Reserve policy decision, seeking clarity before making new EUR/USD moves.
The Euro (EUR) lost ground against the US Dollar (USD) on Tuesday, with the EUR/USD pair drifting lower as traders absorbed mixed U.S. economic data and remained cautious amid intensifying Iran-Israel tensions.
During the American session, EUR/USD slipped toward 1.1514, failing to hold Monday’s gains above the key 1.1600 psychological level. Meanwhile, the US Dollar Index (DXY) stayed resilient near 98.35, supported by safe-haven flows and expectations ahead of the Federal Reserve’s policy announcement.
U.S. economic data presented a mixed picture. Retail Sales fell by 0.9% month-on-month in May—the sharpest decline in four months—reflecting consumer caution ahead of expected tariffs. However, the GDP-linked Retail Sales Control Group surprised on the upside with a 0.4% increase. Industrial production dropped 0.2% in May, missing forecasts and pointing to ongoing softness in the manufacturing sector.
In contrast, Eurozone data brought a note of optimism. The ZEW Economic Sentiment Index for the Euro area surged to 35.3 in June, well above the expected 23.5, signaling improved confidence despite geopolitical uncertainties. Eurozone bond yields also edged higher, with Germany’s 10-year yield climbing to 2.54% and the two-year Schatz yield rising to 1.85%, reflecting cautious investor positioning.
Looking ahead, traders are expected to remain in wait-and-see mode ahead of the Federal Reserve’s key rate decision on Wednesday. Markets will also focus on Eurozone HICP inflation data and comments from ECB policymakers—including Knot, Nagel, and Villeroy—which could shed light on the central bank’s policy path.
