Euro at 3-week low on Fed, retail sales

The euro continues to struggle this week and hasn’t posted a winning daily session since Monday. In the European session, EUR/USD is trading at 1.2112, down 0.12% on the day.

US dollar jumps as Fed reduces corporate purchases

The US dollar flexed some muscles on Thursday, as EUR/USD fell by 0.68%. The dollar jumped after the Federal Reserve announced that it would begin to reduce its corporate bonds portfolio. The Fed ended its purchase of corporate bonds in 2020 but had not given an indication until now as to its intentions.

The Fed has made clear that the sale of corporate bonds is not a monetary policy action, as it does not affect the purchase of government bonds. Despite this clarification, the move drew a strong response from the market as the US dollar made significant gains. Investors will view the move as a step towards a taper of QE and the possibility of a rate hike sooner rather than later. The acceleration in the ISM Services PMI, which hit a 12th consecutive month of growth in May, has fuelled investor optimism that the Fed may have to tighten policy.

The market will quickly shift focus from the Fed to US nonfarm payrolls (12:30 GMT). The consensus stands at 644 thousand, which would be a strong acceleration from the April release of 266 thousand. It will be interesting to see how the Fed responds to the NFP report, given the heightened speculation about a potential tightening of policy.

In Europe, a poor Retail Sales release from the eurozone is weighing on the euro. The May release came in at -3.1%, worse than the consensus of -1.4%. The disappointing release mirrored German Retail Sales, which posted a sharp decline of 5.5%, compared to forecast of -2.4%.


EUR/USD Technical

  • EUR/USD is putting pressure on resistance at 1.2137. Above, there is resistance at 1.2195
  • On the downside, there is support at 1.2025. This is followed by support at 1.1971

For a look at all of today’s economic events, check out our economic calendar.

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at Visit to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.