EUR/USD Struggles Above 1.1200 as US Dollar Takes a Pause

The EUR/USD currency pair remains under pressure, hovering around 1.1200, as the US Dollar finds its footing after a recent run of losses. A combination of factors, including positive US Core Retail Sales growth, dovish signals from the European Central Bank (ECB), and a cautious market mood, weigh on the bullish sentiment for EUR/USD on Wednesday.

During Tuesday's trading session, EUR/USD managed to reach its yearly high at 1.1275, but its upward momentum was halted as the US Dollar temporarily benefited from a negative market sentiment in the first half of the day. However, sentiment shifted after Wall Street's opening, following upbeat earnings reports.

While the Eurozone did not release any significant figures, the United States unveiled mixed data. Retail Sales posted a modest growth of 0.2% MoM in June, while the core reading, Retail Sales Control Group, exceeded expectations at 0.6% growth, instead of the anticipated -0.3%. On the other hand, Capacity Utilization rose to 78.9% in June, but Industrial Production declined by 0.5% in the same month, falling short of market expectations. Additionally, May Business Inventories matched estimates with a 0.2% increase.

Looking ahead, the EU will release the final estimates of the June Harmonized Index of Consumer Prices (HICP) on Wednesday, expected to be confirmed at 5.5% YoY. Meanwhile, in the United States, attention will be on the release of June Housing Starts and Building Permits data, which could provide further insights into the country's economic performance.

As market participants closely monitor economic indicators and central bank communications, EUR/USD's next direction remains uncertain. The currency pair continues to trade within a limited range, with both bulls and bears vying for control. Traders are advised to exercise caution and be prepared for potential fluctuations in the currency market as various economic factors come into play.

TurnAround Point: 1.12600

Our preference

Short positions below 1.12600 with targets at 1.1190 & 1.1170 in extension.

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