- Euro (EUR) pares losses after dismal German retail sales on Monday
- Eurozone GDP expected -1.2% QoQ
- US Dollar (USD) declines on risk outflows
- Optimism surrounding US stimulus package boosts sentiment
The Euro US Dollar (EUR/USD) exchange rate is attempting a rebound on Tuesday, paring some losses from the previous session. The pair settled -0.5% lower on Monday at US$1.2059 towards the low of the day. At 08:15 UTC, EUR/USD trades +0.2% at US$1.2080.
The Euro has been under pressure in recent session owing to its slow rollout of the covid vaccine and dismal German retail sales data.
December retail sales fell an unprecedented -9.6% month on month in December as the tighter lockdown restrictions saw retail sales fall well short of the -2.6% decline forecast and marked the steepest decline since records begun in 1994. December is usually the strongest month for retail sales in Germany.
The stricter lockdown restrictions have been extended to March so numbers could well remain depressed for several months to come, particularly given the slow vaccine rollout in the Eurozone’s largest economy.
Attention will now turn to Eurozone Q4 GDP data. Analysts expect quarter on quarter contraction of -1.2% in the final 3 months of 2020. The data comes following upbeat readings from Spain, France and Germany, which all posted better than forecast growth despite the resurgence of covid in the final quarter of the year.
Meanwhile the US Dollar is edging lower which is offering some support to the common currency. The safe haven greenback is on the back foot as progress towards a stimulus plan in the US buoyed risk sentiment.
Risk sentiment was lifted late on Monday after Democrats filed a $1.9 trillion budget measure in a move to bypass Republicans who have voiced opposition to the massive stimulus plan.
Also helping the mood in the market was a calmer tone to equities as the retail trades versus hedge fund movement showed signs of waning.
There is no high impacting US economic data due today so sentiment is expected to drive the greenback.