EUR/USD stays near multi-week lows as markets await key U.S. Retail Sales data

The EUR/USD pair continued to trade lower on Thursday as risk sentiment remained weak following a volatile U.S. session on Wednesday, driven by rising tensions between President Donald Trump and Federal Reserve Chair Jerome Powell. The U.S. Dollar outperformed its major counterparts as investors turned to safe-haven assets ahead of the upcoming U.S. Retail Sales and weekly Jobless Claims reports.

In the European session, the Euro (EUR) extended its losses, dropping to a session low of 1.1575 and approaching the three-week trough near 1.1565. The pair remains firmly within a bearish trend, with price action hovering near the bottom of a descending channel that began from the July 1 high of 1.1830.

Market nerves were somewhat soothed after President Trump clarified on Wednesday that he does not intend to fire Powell, citing concerns over potential market disruption. However, he expressed a preference for Powell’s resignation—a suggestion later dismissed by a Federal Reserve spokesperson. Trump also hinted at the possibility of removing Powell due to alleged cost overruns related to renovations at the Fed’s historic Washington headquarters, even implying potential fraud.

These ongoing tensions have intensified speculation that Powell could eventually be replaced by a more dovish figure. Such a move could increase inflationary pressure and shake investor confidence in the Fed’s independence, posing broader risks to the credibility of the U.S. financial system.

Meanwhile, Eurozone CPI data confirmed that inflation remains stable and consistent with the European Central Bank’s (ECB) price stability mandate. Headline inflation rose 0.3% in June and 2.0% year-over-year, slightly higher than May’s 1.9%. Core CPI climbed 0.4% on the month and 2.3% year-over-year, both figures matching initial estimates.

Daily Digest Market Movers: Euro Holds Steady Ahead of Key Eurozone CPI and U.S. Retail Sales Data

• The Euro is trading within a tight range on Thursday as markets await two major economic releases: the Eurozone’s final CPI report for June and U.S. Retail Sales figures. The Eurozone’s headline CPI is expected to confirm preliminary data showing a 2.0% year-on-year increase, up from 1.9% in May. Core CPI is projected to remain steady at 2.3% annually, unchanged from the previous month.
• Across the Atlantic, the U.S. Retail Sales report is expected to show a modest 0.1% increase in June, following a sharp 0.9% decline in May. When excluding automobiles, retail sales are forecast to rise by 0.3%, recovering from the prior 0.3% contraction.
• Additionally, weekly U.S. Jobless Claims are projected to rise to 235,000 from 227,000 in the previous week. For the U.S. Dollar to maintain strength and alleviate concerns related to tariffs, the market is looking for robust consumer spending data and lower-than-expected claims—both key to supporting Fed Chair Jerome Powell’s "higher for longer" interest rate policy.
• On Wednesday, data from the U.S. Bureau of Labor Statistics showed that the Producer Price Index (PPI) remained flat in June. The year-over-year figure eased to 2.3% from May’s 2.6%, while Core PPI also stayed unchanged month-over-month and slowed to 2.6% annually from 3.0%. These figures helped calm inflation worries that had been stoked by the hotter-than-expected CPI release on Tuesday.
• In Europe, trade data offered a positive surprise. The Eurozone’s trade surplus expanded sharply in May, rising to €16.2 billion from €9.9 billion in April and surpassing forecasts of a €13 billion surplus.
• Meanwhile, Italian CPI showed a slight acceleration in inflation, with prices rising 1.8% year-on-year in June compared to 1.7% in May. However, since this figure remains below the ECB’s 2% target, it has had little impact on the Euro.

EUR/USD Technical Outlook: Bearish Pressure Builds Near Key Support

EUR/USD is resuming its broader downtrend in Thursday’s early European trading, with the pair testing critical support between the descending trendline at 1.1575 and Wednesday’s low of 1.1565. Despite a low 4-hour RSI, the indicator has not yet entered oversold territory, suggesting that further losses may be on the horizon.

If bearish momentum continues, the next notable support lies at the 78.6% Fibonacci retracement of the late June rally, around 1.1535—a level that previously capped gains on June 20. Below this, the June 19 and 23 lows around 1.1455 represent deeper downside targets, though unlikely to be reached within the day.

On the upside, immediate resistance lies at the previous support zone near 1.1655 (lows from July 11 and 14). Above that, the top of the descending channel sits around 1.1680, with additional resistance near the July 14 and 15 highs just below the 1.1700 mark.