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EUR/USD Unable to Cling to Gains Despite Positive ZEW Sentiment

March 16, 2021 by

EUR/USD rose intraday on the back of the improving economic sentiment in Germany and the whole eurozone but failed to keep gains and dropped below the opening level. The currency pair continued to move lower even after a US retail sales report, which turned out to be much worse than specialists were expecting.

Retail sales dropped by 3.0% in February, much more than analysts were expecting — 0.5%. The drop followed a 7.6% rally registered in the previous month (revised upwardly from 5.3%). Core retail sales sank by 2.7%, whereas economists had predicted an increase of 0.2%. (Event A on the chart.)

Both import and export prices rose in February. Import prices advanced by 1.3% following a 1.4% increase in January. Experts were counting on a bit smaller increase of 1.1%. Export prices increased by 1.6% after rising by 2.5% in the previous month. (Event A on the chart.)

Industrial production and capacity utilization, on the other hand, unexpectedly fell in February. Industrial production dropped by 2.2% after rising by 1.1% in January (revised up from 0.9%). Market participants were anticipating an increase of 0.4%. Capacity utilization fell from 75.5% to 73.8% instead of rising to 75.6% as experts had predicted. (Event B on the chart.)

Business inventories rose by 0.3% in January, matching the consensus forecast perfectly. The previous month’s increase got an upward revision from 0.6% to 0.8%. (Event C on the chart.)

If you have any comments on the recent EUR/USD action, please reply using the form below.

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