Euro undermined by abysmal retail sales data

The euro trended lower on Tuesday as it was undermined by lacklustre Eurozone retail sales data.

Meanwhile, the pound is holding its ground so far this morning, with GBP/EUR flat at €1.1717 and GBP/USD stable at $1.2619. GBP/CAD is rangebound at CA$1.7011, while GBP/AUD and GBP/NZD hold steady at AU$1.9319 and NZ$2.0662, respectively.

Looking ahead, will a series of Federal Reserve speeches help to propel the US dollar higher today?

What’s been happening?

The euro faced headwinds during yesterday’s session, as the Eurozone’s latest retail sales figures printed below forecast.

EUR exchange rates weakened as sales growth contracted by a worrying 1.1% in December. This was the sharpest decline in a year and stoked fresh concerns over the state of the Eurozone economy.

This also offset the publication of Germany’s latest factory orders release, which smashed expectations by reporting an 8.9% expansion in December.

The US dollar, meanwhile, was mostly rangebound on Tuesday as it consolidated some of its gains after soaring to multi-month highs on Monday.

USD demand was also capped by a modest fall in US Treasury yields.

At the same time, the pound was able to tick higher yesterday as it was supported by an improving market mood.

What’s coming up?

Kicking off today’s session was the publication of Germany’s latest industrial production figures.

These reported that factory output continued to contract in December, leaving the euro on the defensive this morning.

USD investors will look to a series of speeches by Federal Reserve policymakers for fresh impetus today.

A broadly hawkish consensus which echoes Fed Chair Jerome Powell’s comments over the weekend could see the US dollar resume its recent rally.

Meanwhile, with UK data still in short supply, the pound may struggle to find direction today.