Forexpros – The euro traded steady to higher against the dollar on Wednesday, erasing losses sustained after the U.S. announced better-than-expected retail sales for July, which sent the dollar gaining earlier.
Stronger-than-expected growth rates out of Germany bolstered the euro, though the broader eurozone economy contracted 0.2% in the second quarter, in line with expectations.
In Asian trading on Wednesday, EUR/USD was trading up 0.04% at 1.2327, up from a low of 1.2323 and off from a high of 1.2330.
The pair was likely to find support at 1.2317, the low from Aug. 14, and resistance at 1.2386, the high from Aug. 17.
The U.S. economy showed signs of life last month, at least from the consumer’s point of view.
The U.S. Commerce Department reported that retail sales jumped 0.8% in July after a 0.7% drop in June, outpacing market expectations for a 0.3% increase.
It was the first gain in four months.
Core retail sales, which exclude automobiles, rose 0.8% in July, well above market calls for a 0.4% increase and up from a 0.8% decline in June.
A separate report showed that U.S. producer prices rose at their fastest clip in five months in July, climbing 0.3% after a 0.1% increase the previous month.
Markets were expecting a 0.2% increase.
The numbers sparked hopes the Federal Reserve may at least delay widely expected plans to stimulate an otherwise tepid economy with monetary easing tools, which weaken the dollar to stimulate growth.
The euro, meanwhile, flexed its muscles against the dollar when Germany reported that its gross domestic product expanded by 0.3% in the second quarter, better than expectations for 0.2% growth.
France, meanwhile, reported that its economy came in flat, beating expectations for a 0.1% contraction.
However, the eurozone economy as a whole contracted by 0.2% in the second quarter, in line with expectations and bringing the annualized rate of contraction to 0.4%, giving the dollar the upper hand Wednesday before investors sold it for profits.
The euro, meanwhile, was up against the pound and up against the yen, with EUR/GBP up 0.06% at 0.7865, and EUR/JPY trading up 0.21% at 97.23.
Later Wednesday, the U.S. will release its latests consumer price index as well as a report on manufacturing activity in the New York area along with government data on net long term securities transactions.
The Federal Reserve is also to produce data on the capacity utilization rate and industrial production, followed by a government report on crude oil inventories.
In the eurozone, markets in France and Italy will be closed due to national holidays.
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