Forex - EUR/USD dips on better-than-expected U.S. retail sales

A A A - Better-than-expected U.S. retail sales sent the euro falling against the dollar on Monday, mainly by rekindling expectations that the economy is growing stronger and may soon stand on its own without Federal Reserve stimulus measures to support it.

In U.S. trading on Monday, EUR/USD was down 0.07% at 1.2981, up from a session low of 1.2941 and off from a high of 1.2999.

The pair was likely to find support at 1.2936, Friday's low, and resistance at 1.3194, Wednesday's high.

The Commerce Department reported earlier that U.S. retail sales rose 0.1% in April, defying expectations for a 0.3% decline. March's figure was revised down to a 0.5% contraction from a 0.4% contraction.

Core retail sales, which exclude automobile sales, fell by 0.1% last month, in line with expectations.

The numbers sparked talk that the Federal Reserve may be closer to scaling back stimulus programs, especially its USD85 billion monthly bond-buying program, which weaken the dollar to spur recovery.

The euro continued to come under pressure after Italy reported on Friday that industrial output dropped 0.8% in March after contracting 0.9% in February.

Analysts were expecting a 0.2% contraction in output at the country's factories, mines and utilities.

Talk that the European Central Bank won't rule out cutting its deposit rate into negative territory kept the single currency lower as well.

The euro, meanwhile, was up against the pound and up against the yen, with EUR/GBP trading up 0.43% at 0.8490, and EUR/JPY trading up 0.18% at 132.25.

On Tuesday, the ZEW Institute is to release its closely watched report on German economic sentiment, a leading indicator of economic health. The eurozone is to release official data on industrial production. Meanwhile, the eurozone's Economic and Financial Affairs Council is to hold talks in Brussels.

The U.S. is to publish official data on import prices.
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This article appears in: Investing , Forex and Currencies

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