The Euro (EUR) faced mild pressure against the US Dollar (USD) during Tuesday’s American session as stronger US economic data lifted the Greenback modestly. At the time of writing, EUR/USD trades around 1.1810, easing after testing its year-to-date high near 1.1821 earlier in Europe. Despite the pullback, the pair remains nearly 0.40% higher on the day, supported by persistent USD weakness ahead of Wednesday’s Federal Reserve (Fed) policy decision.
The latest US Retail Sales report underscored resilient consumer demand, easing concerns about a potential recession. According to the US Census Bureau, Retail Sales rose 0.6% month-over-month in August, surpassing expectations of 0.2%. July’s figure was also revised upward to 0.6% from 0.5%, reinforcing momentum heading into Q3.
Stronger details within the report highlighted even firmer consumption trends. Retail Sales excluding Autos advanced 0.7% against forecasts of 0.4%, while the Retail Control Group—which directly influences GDP—also climbed 0.7%, beating estimates. On a yearly basis, Retail and Food Services Sales accelerated to 5.0%, up from July’s revised 4.1%. These readings signal continued consumer strength despite higher borrowing costs and persistent inflationary pressures.
This robust data arrives just before the Fed’s highly anticipated policy announcement. Markets are fully pricing in a 25-basis-point rate cut to initiate the easing cycle. However, today’s report may dampen speculation of a more aggressive cutting path. Investors will closely watch the Fed’s updated economic projections and dot plot for clarity on the future policy trajectory.
In the short term, the stronger-than-expected Retail Sales have offered the USD some stability, trimming EUR/USD gains. Market focus now turns to the Fed’s decision and forward guidance, which will likely shape the pair’s next direction.
Trade Idea:
Consider short-term selling opportunities on EUR/USD near resistance at 1.1820, with downside targets around 1.1760, while keeping stops above 1.1850 to manage risk.