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Title: EUR/USD retreats towards 1.0200 on downbeat German Retail Sales ahead of US ISM PMI

August 01, 2022 02:11 AM ET

By: AnalysisWatch

EUR/USD falls to 1.0215 after giving up the previous day's gains following disappointing German retail sales data early Monday morning in Europe, also contributing to fresh declines in the major currency pair.

German retail sales fell 8.8% y/y in June, compared to the market consensus of -8.0% and -3.6% previously.

The latest data from the eurozone dashed hopes of a recovery after the eurozone's gross domestic product (GDP) was surprisingly positive on Friday, rising 0.7% from 0.2% in the previous quarter and 0.6% in the year-ago quarter.

Another factor weighing on the EUR/USD exchange rate could be the cessation of Russian gas supplies to Latvia. Moreover, the recent aggressive remarks by Minneapolis Fed President Neil Kashkari and a firmer result from the Fed's preferred inflation indicator are likely to put further downward pressure on the currency pair.

It is worth noting that the pause in the market's risk sentiment has also likely bolstered demand for the U.S. dollar as a safe haven and tamed the pair's sellers. The dour mood could be related to Chinese purchasing managers' indexes and Beijing's warning to the U.S. regarding U.S. House of Representatives Speaker Nancy Pelosi's visit to Asia.

S&P 500 futures retreated from their monthly peak, falling 0.45% on the day, while 10-year U.S. Treasury bond yields rose three basis points to 2.67% by press time.

The final Eurozone S&P Global PMI results for July and the June unemployment rate may entice EUR/USD traders ahead of the July ISM Manufacturing PMI for the United States, which is expected to be 52 versus 53.

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