Euro Forex Market Weakens Ahead of Retail Sales

• Euro Drops Back Further
• Retail Sales & FOMC Minutes to Come
• Stocks Fall After Winning Run

The Euro forex market has taken a turn lower on Wednesday against the US Dollar as the latest attempted recovery from the common currency comes up short. The run down is likely to continue as caution prevails today ahead of the release of US retail sales figures for July and FOMC meeting minutes. These two pieces of data are likely to determine how the week ends for markets, including the stock market. Trading is cautious too on Wall Street as traders wait to digest the figures before making moves. 

Euro Fails to Move Higher

The Euro had been trading reasonably well of late given that it had been near parity with the Dollar in the weeks prior. Like previous recoveries though, the currency has failed to gain any meaningful traction and continued to reverse course on Tuesday and early on Wednesday. Technical analysts are predicting the Euro could move lower still to end the week. Likely to have a big impact on direction though are the US retail sales figures. 

These figures are set to be released later today for July and have managed to capture the attention of the market and create risk aversion in what is an extremely inflation anxiety-prone period. The numbers are set to show an increase of 0.1% on the month. Anything greater could cause further issues not only for the Euro but the broader market.

Risk Aversion Takes Over Ahead of Data

Those involved in forex trading will be aware that there is almost always a period of risk aversion and low trading volume ahead of meaningful data releases. These releases particularly in the current period include US Retail Sales and FOMC meeting minutes. Both of these will be released later on today and could have a determining impact on market direction. 

The fact that the FOMC meeting took place before the inflation reading for July may make the comments less impactful on the market, but traders will still be watching closely and trying to gain an interpretation of how the Fed will move, especially when it comes to interest rates. Most are now expecting a 75 bps rate increase to come next.

Strong Stock Run Begins to Slow

Markets on Wall Street have seen a good run towards the end of last week that has continued through to the early part of this week. That looks set to change slightly with the futures market trading downward and looking set to open lower. 

The Down Jones was down almost 200 points in the early hours alongside similar drops from the S&P 500 and Nasdaq to end a positive period that culminated in a 5-day winning streak for some of the major indices. The S&P 500 is going for its fifth weekly positive finish as markets show strong positive movement from their lows in June despite fears of a recession.