Euro/USD

The Euro jumped to its biggest daily gain in 12 weeks during Friday’s trading session against its US counterpart after a round of disappointing data from the US left many questioning the current state of recovery in the US economy.

The Michigan consumer sentiment index, which is one of the main indicators on consumer confidence in the US, dived from 81.2 in July to 70.2 in August marking one of the biggest declines on record and leaving it at its lowest level in nearly a decade.

The greenback was immediately sold off against most of the major currencies including the Euro, and US treasury yields also took a nosedive, with the 10-year note falling 8 points to 1.28%

With no meaningful economic news due for release from the Eurozone and the US today, all eyes will be on tomorrow’s release of retail sales figures from the US for further confirmation on the state of consumer confidence in the world’s largest economy, and whether there will be a repeat of disappointing news following on from the consumer sediment index on Friday.

If the retail figures do hit the market below expectations, it will show a worrying trend regarding US economic recovery and lead to a very interesting scenario on Wednesday as the US Federal Reserve release the latest minutes from their July meeting where many analysts expect the central bank to lay the groundwork for tightening monetary policy and a reduction in their bond buying program before year-end. 

The Euro managed to smash through the $1.1737 resistance level in Friday’s trading session and in today’s trading session is making a run for the $1.1800 mark where it is currently facing strong resistance as European markets get underway.

For now the current upward movement resembles somewhat of a rebound and the and EUR/USD currency pair could be poised to continue its advance to the next resistance level of $1.1834, and a lot will depend on the release of tomorrow’s retail sales figures from the US as well as GDP figures from the Eurozone.