EUR/USD Reacts: Dismal US Retail Sales Fuel Euro Rally

EUR/USD showed a minor pullback after dismal US retail sales. It hit an intraday high of 1.15691 and currently trading around 1.15617.

US retail sales in May 2025 experienced an unexpected 0.9% decline, marking the most significant monthly drop of the year and exceeding analyst predictions. The primary reason for the decline in spending was reduced gasoline and motor vehicle sales, as well as a decrease in consumer interest in tariff hikes. Additionally, unseasonably cool weather and wider economic and geopolitical concerns contributed to the drop in overall consumption. Retail sales, excluding autos, were underweight in terms of GDP measured by the "control group" measure, which rose by 0.4%, suggesting some resilience among core consumer spending. While overall retail sales increased by 4.5% year-over-year in March-May, there was a mixed picture of consumer health amid uncertainties surrounding the economy.

The pair is holding above short and long-term moving averages in the 4-hour chart. Near-term resistance is seen at 1.1600; a break above this may push the pair to targets of  1.1635/1.1660.  Major bullish momentum is likely only if prices can break above the 1.160 target of 1.1660. On the downside, support is seen at 1.1525 any violation below will drag the pair to 1.1480/1.1435/1.135/1.1300/1.1265.

Market Indicators and Trading Strategy

Commodity Channel Index (CCI)-  Bullish

Average Directional Movement Index (ADX) - Neutral

 It is good to buy on dips around 1.1548-50 with a stop-loss at 1.1500 for a target price of 1.1660.