Eurozone retail sales rebound, euro pushes higher

[Ben Graham]

The euro is showing some strength on Wednesday. In the North American session, EUR/USD is trading at 1.1641, up 0.57% on the day.

Eurozone retail sales up, German factory orders decline

Eurozone data was a mixed bag today. Eurozone retail sales bounced back in June, rising 0.3% m/m after the May figure was revised upwards to -0.3% from an initial -0.7%. This missed the market estimate of 0.4%.

Annualized, retail sales gained 3.1%, up from a revised 1.9% but shy of the market estimate of 2.6%. This was the highest level since Sep. 2024. The positive retail sales are critical for the eurozone economy, as global trade tensions remain high and the strong euro will weigh on exports.

German factory orders declined 1.0% in June after a downwardly revised May figure of -0.8%. This missed the market estimate of a 0.1% gain.

What can we expect from Christine Lagarde & Co.? The European Central Bank received an encouraging sign as the US and EU signed a trade agreement which will remove the uncertainty over tariffs between the two sides.

The ECB meets next on Sep. 11 and a rate cut is currently a close call. The central bank is in a good place and isn't feeling pressure to cut rates. The deposit rate is at 2%, headline inflation is at 2%, right at the ECB's target.

Fed expected to cut rates in September

The Federal Reserve has been in a prolonged wait-and-see stance, but that is slated to end at the September rate meeting. The markets have priced in a quarter-rate cut at 93%, according to the CME's FedWatch. The weak employment report on Friday has raised the likelihood of a rate cut as the US labor market is showing wider cracks than had been expected.

EUR/USD Technical

• EUR/USD has pushed above resistance at 1.1599 and 1.1624. Above, there is resistance at 1.1659
• 1.1564 and 1.1539 are the next support levels

EURUSD 1-Day Chart, Aug. 6, 2025

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