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Forex - EUR/USD falls as U.S. retails sales beat market forecasts

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Shutterstock photo - The euro slid against the dollar on Wednesday after U.S. retail sales beat expectations, sparking a fresh round of expectations that the Federal Reserve is closer to winding monetary stimulus measures.

Rising yields in Italian government debt auctions sent the single currency falling as well.

In U.S. trading on Wednesday, EUR/USD was down 0.66% at 1.2949, up from a session low of 1.2924 and off from a high of 1.3065.

The pair was likely to find support at 1.2866, the low from Dec. 10, and resistance at 1.3074, Tuesday's high.

The Commerce Department reported earlier that U.S. monthly retail sales jumped 1.1% in February, beating expectations for a 0.5% increase.

Core retail sales, which are stripped of automobiles, gasoline and building materials, rose by 1.0% compared to expectations for a 0.2% gain.

The numbers fueled already growing expectations for the Federal Reserve to start considering exit strategies for its monetary stimulus programs that weaken the greenback by design to spur recovery.

The retail sales figures came just days after the Bureau of Labor Statistics reported that the U.S. economy added 236,000 nonfarm payrolls in February, way more than an expected 160,000 increase.

The headline unemployment rate fell to 7.7% in February from 7.9% in January, beating analysts' calls for the rate to remain unchanged.

Elsewhere, official data revealed that the eurozone's industrial output fell 0.4% in January, outpacing market calls for a 0.1% decline.

Meanwhile in Italy, the country's Treasury sold EUR3.32 billion in three-year government bonds at an average yield of 2.48%, up from 2.30% at a similar auction last month, which weakened the euro.

The auction was the first since Fitch Ratings slapped a one-notch downgrade on Italy earlier this month.

The euro, meanwhile, was down against the pound and down against the yen, with EUR/GBP trading down 0.75% at 0.8680, and EUR/JPY trading down 0.63% at 124.42.

On Thursday, the European Central Bank will publish its monthly bulletin, which gauges current and future economic conditions from the bank's viewpoint. Meanwhile, European Union leaders are to hold the first day of a two-day economic summit.

The U.S. is to release government data on producer price inflation, the leading indicator of consumer inflation and the weekly government report on initial jobless claims. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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