Euro Rallies Higher on Upbeat German Retail Sales Data

The euro today rallied higher against the US dollar following the release of upbeat German retail sales data in the early European session. However, the euro was still weighed down by the political uncertainty in Italy and the high Italian 2-year bond yields, which rose above 2.5%.
The EUR/USD currency pair rallied from a low of 1.1518 to a high of 1.1620 following the upbeat German data.
The currency pair began rallying higher in the late Asian session and accelerated its gains in the early European session after Germany’s Federal Statistical Office released the country’s retail sales data for April. The retail sales expanded by a monthly 2.3%, which was much higher than the expected 0.7% expansion. The retail sales translated into an annualized 1.2% growth rate missing expectations by 0.1%. The German employment report released today indicated that unemployment declined by 11,000, which was higher than the expected 10,000. The country’s unemployment rate came in at 5.2%, which was lower than the expected 5.3%. The French GDP data also released today beat expectations on an annualized basis.
The Eurozone economic sentiment survey released by the European Commission also boosted the currency pair as it was recorded at 112.5 versus the expected 112. The Eurozone business climate indicator also beat expectations by coming in at 1.45 versus the consensus estimate of 1.3. Germany’s import prices for April were lower than expected, but could not derail the pair’s rally.
The currency pair’s short-term performance is likely to be influenced by the release of German CPI data scheduled for later today.
The EUR/USD currency pair was trading at 1.1605 as at 10:26 GMT having rallied from a low of 1.1518. The EUR/JPY currency pair was trading at 126.21 having risen from a low of 125.03.

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