EUR/USD accelerates towards 0.9900 as DXY extends losses, German Retail Sales eyed
- EUR/USD is marching towards 0.9900 as the current upside momentum is extremely strong.
- The DXY has surrendered 112.00 on a consecutive decline in the US GDP by 0.6%.
- German Retail Sales are expected to remain vulnerable ahead.
The EUR/USD pair is aiming to recapture the critical resistance of 0.9900 as it has comfortably established above 0.9800 and the upside momentum is extremely firmer. The asset extended its gains on Thursday after surpassing the hurdle of 0.9750 as the risk-on market profile strengthened further amid more weakness in the US dollar index (DXY).
The DXY concluded its pullback move and resumed its downside journey after failing to sustain above 113.00. The asset picked offers after the US Gross Domestic Product (GDP) data remained in line with the estimates and the prior release. The US economy has reported an annualized de-growth of 0.6% in the second quarter. Apart from that core Personal Consumption Expenditure (PCE) data expanded further by 4.7%, against the estimates and the prior release of 4.4%.
Federal Reserve (Fed) Bank of Cleveland President Loretta Mester cited on Thursday that they are not yet at a point where they could start thinking about stopping interest rate hikes, as reported by Reuters. If interest rates are set to rise further, the US economic fundamentals should be supportive to bear the consequences of policy tightening. And, a consecutive reading of a negative growth rate is not a measure of support for the US economy.
On the Eurozone front, German Retail Sales data will hog the limelight. The economic data is expected to decline firmly by 5.1% vs. the prior release of a decline of 2.6% on an annual basis. In times when price pressures are accelerating in the German region, a decline in Retail Sales data indicates an extreme vulnerability in the retail demand. A higher-than-expected decline in the economic data could dampen the mood of Eurozone investors.
As European Central Bank (ECB) President Christine Lagarde is looking to hike interest rates by 125 basis points in the coming monetary policy meetings, weaker demand will not let them hike rates unhesitatingly.