Euro Gains Momentum on Bright US Earnings and Dovish Fed Comments

The Euro picks up from multi-week lows but remains 0.6% lower on the week.
Bright US corporate earnings data and dovish comments from Fed Waller boost risk appetite on Friday.
EUR/USD maintains its broader bearish trend intact, with 1.1655 resistance likely to hold bulls.

The EUR/USD pair is posting moderate gains in a calm market session on Friday, with risk appetite increasing in Asia after the market digested bright consumption and employment figures from the US, and Federal Reserve (Fed) Governor Christopher Waller reiterated his call for lower rates in a speech late on Thursday.

The Euro (EUR) is trading near 1.1615 during the early European session on Friday, after having bounced up from three-week lows of 1.1555 on Thursday. The pair, however, remains on track for a 0.60% decline this week on its second consecutive negative weekly performance.

US economic data released on Thursday revealed a strong recovery in Retail Sales in June and an unexpected decline in unemployment claims, which fell to their lowest level in the last three months on the week of July 12. These data, and the strong Consumer Price Index (CPI) seen earlier this week , have provided further reasons for the Federal Reserve (Fed) to maintain its monetary policy unchanged until the impact of tariffs clarifies.

Later on Thursday, a batch of upbeat corporate results, with Netflix earnings beating expectations in the second quarter thanks to a weaker US Dollar (USD), boosted market sentiment, triggering a further rally on Equities, weighing on the safe-haven US Dollar, and allowing the pair to bounce higher.

The sentiment extended through the Asian session, further supported by dovish comments from Fed Governor Waller, who warned about increasing risks for the labor market and for the overall economic growth, and affirmed that the Fed should cut interest rates after its July meeting.

The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the strongest against the Japanese Yen.

USD EUR GBP JPY CAD AUD NZD CHF USD -0.15% 0.00% 0.12% -0.08% -0.17% -0.19% -0.17% EUR 0.15% 0.17% 0.28% 0.06% -0.02% -0.16% -0.01% GBP -0.01% -0.17% 0.10% -0.08% -0.18% -0.27% -0.17% JPY -0.12% -0.28% -0.10% -0.18% -0.28% -0.41% -0.18% CAD 0.08% -0.06% 0.08% 0.18% -0.11% -0.19% -0.08% AUD 0.17% 0.02% 0.18% 0.28% 0.11% -0.10% 0.01% NZD 0.19% 0.16% 0.27% 0.41% 0.19% 0.10% 0.11% CHF 0.17% 0.01% 0.17% 0.18% 0.08% -0.01% -0.11%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).

US economic data this week shows the picture of a resilient economy, despite the higher inflationary trends stemming from Trump's tariffs. The combination of strong consumption with a healthy labour market and rising consumer prices has practically discarded an interest rate cut in July, and the odds for one in September are declining. In this context, losses in the US Dollar are expected to be limited.
On Thursday, the US Census Bureau reported a 0.6% increase in June's Retail Sales, well above the 0.1% forecasted by market analysts and following a 0.9% contraction in May. Excluding automobiles, sales of all other products grew 0.5%, also beyond the 0.3% increment anticipated by the market consensus, which reveals that the improvement in consumption was broad-based.
Beyond that, weekly Initial Jobless Claims declined to 221,000 on the week of July 12, from an upwardly revised 228,000 in the previous week and against expectations of an increase to 235,000.
Finally, the Philadelphia Fed Manufacturing Index improved to 15.9, beating the market consensus, which had anticipated a -1 reading, following a -4 reading in the previous month.
In the Eurozone, German Producer Price Index(PPI) data released on Friday has shown a 0.1% growth in inflation in June, a tick above the 0% market consensus, after a 0.2% contraction in May. Year-on-year, however, the PPI has contracted at a 1.3% rate, beyond May's 1.2% fall and extending the deflationary trend for the fourth consecutive month.

EUR/USD is bouncing up from Thursday's lows, but the broader trend remains bearish. The pair has kept trading lower within an expanding wedge since July 1. This figure highlights an emotional market and often anticipating a significant reversal.

Friday's price action shows easing bearish pressure, but the 4-hour Relative Strength Index (RSI) remains below the 50 level into negative territory, with a previous support level, at 1.1655 (July 11, 14 lows) likely to challenge bulls. Further up, the channel's top at 1.1670, and the July 14 and 15 highs right below 1.1700 are the next targets.

On the downside, the area between Thursday's low at 1.1555 and 1.1530, where the 78.6% Fibonacci retracement of the late June bullish run at 1.1535 crosses the wedge bottom, is a significant technical floor. Below there, the June 22 and 23 lows, at 1.1455, would come into focus.

The Retail Sales data, released by the US Census Bureau on a monthly basis, measures the value in total receipts of retail and food stores in the United States. Monthly percent changes reflect the rate of changes in such sales. A stratified random sampling method is used to select approximately 4,800 retail and food services firms whose sales are then weighted and benchmarked to represent the complete universe of over three million retail and food services firms across the country. The data is adjusted for seasonal variations as well as holiday and trading-day differences, but not for price changes. Retail Sales data is widely followed as an indicator of consumer spending, which is a major driver of the US economy. Generally, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.

Euro Gains Momentum on Bright US Earnings and Dovish Fed Comments

You may have missed

Amber Group Deposits $1.35M Worth Of $ID Tokens On Binance: Profit-Taking Or Loss-Cutting?

Solana Confirms Upside Breakout With Bullish Pennant – Here’s The Target

BlockDAG’s Presale Surges Past $61.3M with Team Unveiling Amid BNB Token Burn and Toncoin Price Updates